Opinion
Case No.: 1:19 CV 257
2019-08-15
Kevin MALONE, et al., Plaintiffs v. STANLEY BLACK & DECKER, INC., et al., Defendants
Anthony N. Palombo, Thomas J. Sheehan, W. Craig Bashein, Bashein & Bashein, Louis E. Grube, Paul W. Flowers Co., Paul W. Flowers, Cleveland, OH, for Plaintiffs. Gary E. Becker, Dinsmore & Shohl-Cincinnati, V. Brandon McGrath, Bingham Greenebaum Doll-Cincinnati, Cincinnati, OH, Richard A. Schuster, Ryan L. Woody, Matthiesen, Wickert & Lehrer, Hartford, WI, for Defendants.
Anthony N. Palombo, Thomas J. Sheehan, W. Craig Bashein, Bashein & Bashein, Louis E. Grube, Paul W. Flowers Co., Paul W. Flowers, Cleveland, OH, for Plaintiffs.
Gary E. Becker, Dinsmore & Shohl-Cincinnati, V. Brandon McGrath, Bingham Greenebaum Doll-Cincinnati, Cincinnati, OH, Richard A. Schuster, Ryan L. Woody, Matthiesen, Wickert & Lehrer, Hartford, WI, for Defendants.
ORDER
SOLOMON OLIVER, JR., UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Currently pending before the court in the above-captioned case is Defendant Rexon Industrial Corporation, Limited's Motion to Dismiss for lack of personal jurisdiction and for failure to state a claim (ECF No. 4). For the following reasons, the court grants Defendant's Motion to Dismiss for lack of personal jurisdiction. As a result of the court's ruling on personal jurisdiction, there is no basis to address Defendant's Rule 12(b)(6) Motion to Dismiss for failure to state a claim.
II. BACKGROUND
This case arises out of an injury sustained by Plaintiff while using a table saw. Plaintiffs Kevin Malone and Colleen Malone ("Plaintiffs," or individually, "Plaintiff") state that Kevin Malone had purchased a Craftsman 10-inch Table Saw ("Craftsman Table Saw") in Mentor, Ohio, which he was using on December 21, 2016 when he injured himself. (Compl. ¶¶ 5–9, ECF No. 1-1.) Plaintiffs commenced this products liability action against Rexon Industrial Corporation, Limited ("Rexon" or "Defendant"), and others, alleging Defendant's product caused Plaintiff tortious injury. On February 2, 2019, Defendant filed a Motion to Dismiss on the basis that this court lacks personal jurisdiction over it and that Plaintiffs have failed to state a claim upon which relief can be granted (ECF No. 4). In this Motion, Defendant states that it is a Taiwan company with its principal place of business in Taiwan. (Def. Mot. at Page ID #50, ECF No. 4.) Although Rexon notes that it does business, unrelated to this claim, with a fitness company in Ohio (Mot. at PageID # 55), Rexon maintains that it has no offices or employees in Ohio, has not engaged in any marketing targeted to Ohio, has not entered into any contracts in Ohio, and has not paid any taxes in Ohio. (Id. ) Defendant owns a website, but states that it is passive and that the website contains no ability for customers to order products through it. (Id. ) Furthermore, Defendant's Motion states that Rexon designed, manufactured, and sold the product at issue to Sears, Roebuck, and Company (‘Sears") on September 19, 2014. (Id. ) Rexon delivered the product to a port in Shanghai, China and transferred the title from Rexon at the port. (Id. ) Defendant asserts that Sears was responsible for the risk of shipping during transit, and that Rexon did not determine where the product was to be distributed after it reached the port in Shanghai. (Id. ) Similarly, Defendant maintains that it did not ship the saw or any of its units to any location in Ohio. (Id. ) Plaintiff submitted a response in opposition on March 25, 2019 (ECF No. 8). Rexon replied on April 8, 2019 (ECF No. 11).
III. LEGAL STANDARD
When ruling on a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) in a diversity case, the court must "look to the law of the forum state to determine whether personal jurisdiction exists." Calphalon Corp. v. Rowlette , 228 F.3d 718, 721 (6th Cir. 2000) (citing LAK, Inc. v. Deer Creek Enters. , 885 F.2d 1293, 1298 (6th Cir. 1989) ). Ohio's long-arm statute is "not coterminous with federal constitutional limits." Schneider v. Hardesty , 669 F.3d 693, 700 (6th Cir. 2012). Thus, the court will find that it has personal jurisdiction over a defendant only if the plaintiff "presents a prima facie case that: (1) jurisdiction is proper under a long-arm statute or other jurisdictional rule of Ohio, the forum state; and (2) the Due Process Clause also allows for jurisdiction under the facts of the case." Conn v. Zakharov , 667 F.3d 705, 711 (6th Cir. 2012). When making determinations of jurisdiction based on a Rule 12(b)(2) Motion without holding an evidentiary hearing, the court is required to "view allegations in the pleadings and the documentary evidence in a light most favorable to the plaintiffs, resolving all reasonable competing inferences in their favor." Goldstein v. Christiansen , 70 Ohio St.3d 232, 638 N.E. 2d 541, 544 (1994).
IV. LAW AND ANALYSIS
There is no dispute as to the lack of general jurisdiction in this case, where Defendant's principal place of business is not in Ohio. See BNSF Ry. Co. v. Tyrrell , ––– U.S. ––––, 137 S. Ct. 1549, 1552–53, 198 L.Ed.2d 36 (2017) (noting that only in exceptional cases will a defendant be considered "at home" in a forum state in which it is neither incorporated nor has its principal place of business). But the parties disagree as to whether there is specific jurisdiction over Rexon. Plaintiffs additionally request an opportunity to conduct discovery related to Defendant's Motion. (Id. at Page ID # 104.)
A. Ohio's Long-Arm Statute
The Sixth Circuit has explained that Ohio law "requires that the court find specific jurisdiction under one of the bases of jurisdiction listed in Ohio's long-arm statute." Conn v. Zakharov , 667 F.3d 705, 717 (6th Cir. 2012). Ohio's long-arm statute provides, in relevant part, that:
(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
[...]
(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods
used or consumed or services rendered in this state;.
(C) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.
Ohio Revised Code §§ 2307.382(A)(1)-(2), (4), and (C). The Sixth Circuit has found that § 2307.382(C) requires a " ‘proximate cause’ relationship between a plaintiff's personal injury claim and the defendant's conduct in Ohio," which is a "tighter fit" than the "but for" approach under the Due Process Clause. Brunner v. Hampson , 441 F.3d 457, 465–66 (6th Cir. 2006) (citing Goldstein v. Christiansen , 70 Ohio St.3d 232, 638 N.E.2d 541, 544–45 (1994) ).
Defendant argues that Plaintiff cannot meet the requirements of § 2307.382(C) because Plaintiffs cannot show that the claim arises from any of the available types of contacts in § 2307.382(A). Plaintiffs, on the other hand, contend that Rexon has generated substantial revenue from sales in Ohio such that it meets the requirements of the long-arm statute. In particular, Plaintiffs maintain that because Rexon was doing business with Sears, a well-known American company, "[t]here is no reason to believe that Defendant Rexon has sold just one, or even a handful of Craftsman table saws in Ohio." (Opp'n at PageID #99.) Plaintiffs also point out that although Defendant's representative avers that Defendant has and may have potential contacts with Ohio with respect to other products that it manufactures and sells, its representative does not state in his Declaration whether other Craftsman Table Saws have generated revenue for Rexon in Ohio. (Def.'s Motion at Page ID #55, n.2; Chen Decl., ECF No. 5-1.) Since this litigation is in its preliminary stages, Plaintiffs request an opportunity to conduct discovery to substantiate their argument that Defendant has generated "substantial revenue" through the sales of "hundreds, if not thousands of such devices in this jurisdiction" in satisfaction of the long-arm statute. (Opp'n at PageID #99–100.)
Thus, in considering the documentary evidence in the light most favorable to Plaintiffs, the court finds that, because of Defendant's high volume of business activity in this state, Plaintiffs could plausibly show, with additional discovery, that Rexon derived "substantial revenue" from table saw sales in Ohio.
B. Due Process Clause
But even if the court found that Plaintiffs had met their burden to make a prima facie showing based on the long-arm statute, Plaintiffs are still required to also show that jurisdiction is proper under the Due Process Clause.
In contrast to general jurisdiction, which requires a defendant's "affiliations with the State [to be] so ‘continuous and systematic’ as to render them at home in the forum State," specific jurisdiction "depends on an ‘affiliatio[n] between the forum and the underlying controversy.’ " Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 920, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (quoting International Shoe Co. v. Washington , 326 U.S. 310, 317, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). In other words, the relevant contacts in a specific jurisdictional inquiry are those related to the claim. To exercise specific jurisdiction over a defendant, due process requires that the court determine "whether minimum contacts are satisfied so as not to offend ‘traditional notions of fair play and substantial justice.’ " Calphalon Corp. v. Rowlette , 228 F.3d 718, 721 (6th Cir. 2000) (citing Cole v. Mileti , 133 F.3d 433, 436 (6th Cir.1998) ). The Sixth Circuit uses a three-part test in applying this standard:
(1) First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. (2) Second, the cause of action must arise from the defendant's activities there. (3) Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.
S. Mach. Co. v. Mohasco Indus. , 401 F.2d 374, 381 (6th Cir. 1968). If any one of these criterion is not met, the court cannot invoke personal jurisdiction over the defendant. See LAK, Inc. v. Deer Creek Enters. , 885 F.2d 1293, 1300 (6th Cir. 1989).
To satisfy the purposeful availment requirement, "the sine qua non for in personam jurisdiction," S. Mach. , 401 F.2d 374 at 381, a defendant must "avail[ ] himself of the privilege of conducting business" in the forum state, and be "shielded by the benefits and protections of the forum's laws," Burger King v. Rudzewicz , 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal quotations omitted). In addition, the defendant must have purposefully formed contacts with the forum state "such that he should reasonably anticipate being haled into court there," World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and "the contacts [must] proximately result from actions by the defendant himself that create a ‘substantial connection’ with the forum state." Burger King , 471 U.S. at 475, 105 S.Ct. 2174 (citing McGee v. Int'l Life Ins. Co. , 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957) ). Purposeful availment has long been considered the "constitutional touchstone" of personal jurisdiction because once a defendant purposefully avails itself, it concedes that it is not being "haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts." Burger King Corp. , 471 U.S. at 474–75, 105 S.Ct. 2174.
Over the last two decades, the Supreme Court has clarified the scope of specific jurisdiction. The Supreme Court's plurality opinion in J. McIntyre Machinery, Ltd. v. Nicastro , is particularly instructive here. 564 U.S. 873, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011). The Court in Nicastro rejected the New Jersey state court's "stream-of-commerce theory of jurisdiction," which would have permitted the state court to exercise jurisdiction over an English manufacturing company that neither marketed the goods at issue in New Jersey or shipped them there. Id. at 886–87, 131 S.Ct. 2780. The defendant company in Nicastro sold its products to an independent company that then sold the products in the United States, and no more than four machines ended up in the forum state, with the record suggesting that only the one that caused the injury was, in fact, in New Jersey. Id. at 878–79, 131 S.Ct. 2780. Although it was clear that the company held U.S. patents for its products and its products were being purchased in the U.S., the Court clarified that it was not enough to "direct[ ] marketing and sales efforts at the United States." Id. at 885, 131 S.Ct. 2780. To purposefully avail itself of jurisdiction, the Court found that a defendant must purposefully direct the conduct at issue at the forum state. Id. at 886, 131 S.Ct. 2780. Based on that standard, the fact that the "defendant does not have a single contact with New Jersey short of the machine in question ending up in this state" shows that the company did not "purposefully avail itself of the New Jersey market." Id. Thus, any purposeful availment analysis must also consider whether a defendant's contacts are not only substantial, but whether they were specifically directed at the forum state. See also CompuServe, Inc. v. Patterson , 89 F.3d 1257, 1265 (6th Cir. 1996) (finding that "stream of commerce, without more, would be at best a dubious ground for jurisdiction"); Irizarry v. E. Longitude Trading Co., Ltd. , 296 F. Supp. 2d 862 (2003) (noting that "the Sixth Circuit has adopted Justice O'Connor's ‘stream of commerce plus’ approach, set forth in Asahi Metal Industry Co. v. Superior Court of California , 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987)").
While purposeful availment is the lodestar, the Sixth Circuit has applied a "lenient ‘but for’ approach" with respect to the second requirement, that the claims must arise from the contacts that caused the claim. Brunner v. Hampson , 441 F.3d 457, 465 (2006). Finally, a determination of reasonableness depends on several factors, including the burden on the defendant, the interest of the forum state in resolving the conflict, the plaintiff's interest in obtaining relief, and other states' interest in securing the most efficient resolution of the controversy. Intera Corp. v. Henderson , 428 F.3d 605, 618 (6th Cir. 2005).
Here, Rexon "concedes that the Plaintiff can satisfy the first prong of the specific jurisdiction test." (Def.'s Mot. at Page ID #57.) Instead, Rexon argues that Plaintiffs' claims do not arise out of Defendant's contacts. Similar to the defendant in Nicastro , Rexon avers that it does not have offices, employees, agents, or representatives in Ohio, and that it has never owned property, maintained a bank account, paid taxes, marketed its products, or registered to do business in Ohio. (Chen Decl. ¶¶ 4–12) Defendant also states that although it manufactures the table saws, it has no direction over the sales once the saws come into Sears' possession. Thus, Defendant argues that it has no suit-related contacts that are specifically directed at the forum state.
Based on the substance of Defendant's arguments, it appears that Defendant confused the different aspects of the Due Process Clause personal jurisdiction test and intended to rest its arguments on the purposeful availment prong, instead of the "arising out of" requirement. In analyzing the relevant contacts, the court first notes that this case nearly parallels Nicastro . As in Nicastro , Defendant does not own property, pay taxes, advertise, or send its employees to the forum state. See Nicastro , 564 U.S. at 886, 131 S.Ct. 2780. Similarly, Defendant in this case did not direct its sales of Craftsman Table Saws to the forum state. See id. (finding that the fact that up to four machines ended up in New Jersey is not enough to show that the defendant purposefully availed itself of the New Jersey market). Even if Plaintiffs were able to prove, after some discovery, that Defendant had substantial sales of Craftsman Table Saws in Ohio, the fact that Defendant did not direct its sales to Ohio is fatal to Plaintiff's jurisdictional argument. Thus, despite Defendant's mischaracterization, the court finds that the sum and substance of Defendant's Motion to be well-taken.
Although Defendant is correct that the Supreme Court has found that, for the purposes of jurisdiction, a claim does not "arise out of" unrelated contacts with the forum state, Bristol-Myers Squibb Co. v. Superior Ct. of Cal. , ––– U.S. ––––, 137 S. Ct. 1773, 1783, 198 L.Ed.2d 395 (2017), Plaintiff was injured in the forum state, thus forming a relevant contact wherefrom Plaintiffs' claim arises. See also Brunner v. Hampson , 441 F.3d at 465–66 (noting that the Due Process Clause's "arising out of" prong requires only "but for" causation).
The court also notes that since the court is engaging in a specific jurisdiction analysis, Defendant's contacts with Ohio based on its fitness equipment sales are unrelated to the Craftsman Table Saw products liability claim. As the court has indicated, supra , there is no dispute as to the lack of general jurisdiction over Defendant.
Having found a lack of personal jurisdiction over Defendant under the Due Process Clause, the court finds it unnecessary to allow opportunity for discovery on jurisdictional issues pursuant to Ohio's long-arm statute.
V. CONCLUSION
For the foregoing reasons, Defendants' Motion to Dismiss for lack of jurisdiction (ECF No. 4) is granted. As a result of the court's ruling on personal jurisdiction, there is no basis to address Defendant's Rule 12(b)(6) Motion to Dismiss for failure to state a claim.
IT IS SO ORDERED.