Tuesday, January 31, 2012

Plaintiffs Offered Second Chance to Prove Personal Jurisdiction over Non-Resident Defendant

Windsor v. Spinner Industry Co., Ltd., No. JKB-10-114 (U.S. District Court for D. Md., October 19, 2011).

The Windsor family (“Plaintiffs”) brought a products liability suit after an accident in which the front wheel of Robert Windsor’s bicycle dislodged, injuring him and his toddler son. The Plaintiffs brought suit against Spinner Industry Co., Ltd., Raleigh America, Inc., Dick’s Sporting Goods, Inc., J & B Importers, Inc., and Joy Industrial Co., Ltd., (collectively “Defendants”), alleging that defects in the design, manufacture or assembly of the bicycle, were the proximate cause of the accident.

Defendant Joy Industrial Co. (“Joy”) filed a Motion to Dismiss all claims against it for lack of personal jurisdiction. Joy is a corporation located in Taiwan, that designs and manufactures bicycle components. Plaintiffs alleged that their bicycle contained a “quick release skewer” manufactured by Joy, and that a defect in the skewer contributed to the accident. Both parties agree that Joy sells its products to distributors, manufacturers, and trading companies, who in turn, market them in every U.S. state. However, Joy argued that it had no direct contacts with the State of Maryland. The Plaintiffs contend that the nationwide marketing of Joy products is sufficient to constitute minimum contacts between Joy and Maryland to subject Joy to specific jurisdiction here in Maryland.

Generally, the Due Process Clause “sets the outer boundaries of state judicial authority.” It constrains a state from exercising jurisdiction over a non-resident defendant, and requires sufficient minimum contacts between that defendant and the forum state. Specific jurisdiction arises where a non-resident lacks continuous and systematic contacts with the forum, but has nonetheless purposefully availed itself of the privilege of conducting activities within the forum state and thereby invoked the benefits and protections of its laws. At issue in this case, is the extent to which a state may exercise specific jurisdiction over a non-resident manufacturer, whose only connection to the forum is that its products are sold by third-party distributers.

The Court found that the factual record failed to demonstrate a prime facie case of personal jurisdiction over Joy, as the Plaintiffs’ brief focused on the conduct of the third party distributers and manufactures within Maryland. The Court stated that the Plaintiffs’ “theory” of jurisdiction amounts to no more than the “knew or should have known” standard found in the explicitly rejected Supreme Court case of McIntyre. Rather than grant the Motion to Dismiss in favor of Joy, the Court issued an order holding in abeyance Joy’s Motion to Dismiss and scheduled an evidentiary hearing on the issue Joy’s contacts with the forum. Going a step further, the Court directs the Plaintiffs to produce evidence at that hearing of the chain of distribution that brought the allegedly defective skewer to Raleigh and then to Dick’s Sporting Goods, and provide showing of “any additional conduct” that would evince an intent to serve the Maryland bicycle market in particular. The Court gives the Plaintiffs the key in a sense, to sustain their claim of personal jurisdiction over Joy, and a second chance to do so. 

Article contributed by Andy Nichols

No comments:

Post a Comment