Sentry Insurance A Mutual Company v. TPI Corporation, No. 6:2020cv01004 - Document 64 (D. Kan. 2020)
Court Description: MEMORANDUM AND ORDER granting 42 Motion to Dismiss plaintiff's first amended complaint for Lack of Personal Jurisdiction. Signed by U.S. District Senior Judge Sam A. Crow on 12/28/20. (msb)
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Sentry Insurance A Mutual Company v. TPI Corporation Doc. 64 I N THE UNI TED STATES DI STRI CT COURT FOR THE DI STRI CT OF KANSAS SENTRY I NSURANCE A MUTUAL COMPANY AS SUBROGEE OF H&R PARTS CO., I NC., Plaint iff, v. No. 20- 1004- SAC- TJJ TPI CORPORATI ON and CHROMALOX, I NC., Defendant s. MEMORANDUM AND ORDER The case com es before t he court on t he m ot ion ( ECF# 42) by t he defendant Chrom olox, I nc. ( “ Chrom olox” ) t o dism iss pursuant t o Fed. R. Civ. P. 12( b) ( 2) for lack of personal j urisdict ion. As alleged in t he first am ended com plaint , H&R Part s Co., I nc. ( “ H&R” ) m anufact ures sheet m et al com ponent s for t he aerospace indust ry. I n Decem ber of 2009, H&R purchased t wo infrared heat ers m anufact ured by a subsidiary of TPI Corporat ion ( “ TPI ” ) . H&R purchased t he heat ers t hrough Grainger I ndust rial Supply and inst alled t hem . On or about January 21, 2019, m elt ed m at erial dropped from t he infrared heat er or it s heat ing elem ent s ignit ing com bust ible m at erial and causing a fire at H&R. Prior t o t he fire, t he heat ing elem ent s in t he infrared heat er were replaced wit h heat ing elem ent s m anufact ured by Chrom alox. Chrom alox subm it s uncont est ed evidence t hat 1 Dockets.Justia.com t he m arkings on t he heat ing elem ent in quest ion show it was m anufact ured at Chrom slox’s facilit y in Mexico and was shipped from t hat facilit y t o TPI Corporat ion Raw Mat erials, in Gray, Tennessee, on August 31, 2012. ( Affidavit of Bruce Barnes, Chrom alox Vice President of Global Professional Services, ECF# 43- 2, ¶ 13) . Chrom alox denies personal j urisdict ion exist s in t his dist rict , because it is a Delaware corporat ion wit h it s principal place of business in Pit t sburgh, Pennsylvania, and it does not rent or own propert y in Kansas, did not design, m anufact ure, or sell t he heat ing elem ent in Kansas, and did not ship t his heat ing elem ent t o Kansas. The plaint iff Sent ry I nsurance Mut ual Com pany ( “ Sent ry” ) concedes t hat Chrom alox did not m anufact ure t he heat ing elem ent in Kansas and did not init ially sell or ship it t o Kansas. Nonet heless, Sent ry argues t hat Chrom alox in it s ordinary course sells and dist ribut es a subst ant ial am ount of elect ric heat ing product s int o Kansas and t hat t his level of business act ivit y warr ant s t he court exercising “ j urisdict ion over it for a t ransact ion t hat occurred beyond Kansas borders.” ECF# 62, p. 6. As t he part y assert ing personal j urisdict ion t o exist , Sent ry bears t he burden of proving it . XMission, L.C. v. Fluent LLC, 955 F.3d 833, 839 ( 10t h Cir. 2020) . From t he com plaint , t he court accept s t he well- pleaded fact s unless “ cont rovert ed by sworn st at em ent s.” I d. at 836 ( int ernal cit at ions om it t ed) . I n t he absence of an evident iary hearing, t he plaint iff 2 m ust “ m ake a prim a facie showing t hat j urisdict ion exist s” and m ay overcom e dism issal wit h well- pled allegat ions or sworn st at em ent s, if t rue, would sust ain personal j urisdict ion of t he defendant . I d. at 839 ( int ernal quot at ion m arks and cit at ions om it t ed) . “ Personal j urisdict ion is est ablished by t he laws of t he forum st at e and m ust com port wit h const it ut ional due process.” Firem an’s Fund I ns. Co. v. Thyssen Min. Const . of Canada, Lt d., 703 F.3d 488, 492 ( 10t h Cir. 2012) . As liberally const rued by Kansas court s, t he forum ’s long- arm st at ut e ext ends “ personal j urisdict ion over nonresident defendant s t o t he full ext ent perm it t ed by t he due process clause of t he Fourt eent h Am endm ent of t he Unit ed St at es Const it ut ion.” I n re Hesst on Corp., 254 Kan. 941, 951, 870 P.2d 17 ( 1994) ( int ernal quot at ion m arks and cit at ion om it t ed) . “ Consequent ly, t his court need not conduct a st at ut ory analysis apart from t he due process analysis.” Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166 ( 10t h Cir. 2011) ( int ernal quot at ion m arks and cit at ion om it t ed) . “ ’The Suprem e Court has held t hat , t o exercise j urisdict ion in harm ony wit h due process, defendant s m ust have “ m inim um cont act s” wit h t he forum st at e, such t hat having t o defend a lawsuit t here would not “ offend t radit ional not ions of fair play and subst ant ial j ust ice.” ’” Newsom e v. Gallacher, 722 F.3d 1257, 1264 ( 10t h Cir. 2013) ( quot ing Dudnikov v. Chalk & Verm ilion Fine Art s, I nc., 514 F.3d 1063, 1070 ( 10t h Cir. 2008) ( quot ing in t urn I nt ernat ional Shoe Co. v. Washingt on, 326 U.S. 310, 316, 66 S.Ct . 3 154, 90 L.Ed. 95 ( 1945) ) ) . The defendant ’s m inim um cont act s m ust be such t hat t he defendant “ ’should reasonably ant icipat e being haled int o court t here.’” XMission, 955 F.3d at 839- 40 ( quot ing World- Wide Volkswagen Corp. v Woodson, 444 U.S. 286, 297 ( 1980) ) . There are t wo t ypes of personal j urisdict ion wit h t he first being “ general” or “ all purpose” which allows a court t o “ hear any claim against t hat defendant , even if all t he incident s underlying t he claim occurred” out side t he forum , and t he second being “ specific” or “ case linked” which allows a court t o hear only claim s “ deriving from , or connect ed wit h, t he very cont roversy t hat est ablishes j urisdict ion.” Brist ol- Myers Squibb Co. v. Superior Court of California, San Francisco Count y,, - - - U.S.- - - , 137 S. Ct . 1773, 1780 ( 2017) . For general j urisdict ion, m inim um cont act s exist when a defendant corporat ion’s “ affiliat ions wit h t he St at e are so cont inuous and syst em at ic as t o render t hem essent ially at hom e in t he forum St at e.” Old Republic I nsurance Com pany v. Cont inent al Mot ors, I nc., 877 F.3d 895, 904 ( 10t h Cir. 2017) ( int ernal quot at ion m arks and cit at ions om it t ed) . “ Because general j urisdict ion is not relat ed t o t he event s giving rise t o t he suit , court s im pose a m ore st ringent m inim um cont act s t est , requiring t he plaint iff t o dem onst rat e t he defendant 's cont inuous and syst em at ic general business cont act s.” I d. “ But ‘only a lim it ed set of affiliat ions wit h a forum will render a defendant am endable t o’ general j urisdict ion in t hat St at e.” Brist ol- Myers Squibb, 137 S. Ct . at 1780 ( quot ing Daim ler AG v. Baum an, 571 U.S. 117, 4 137 ( 2014) ( “ Wit h respect t o a corporat ion, t he place of incorporat ion and principal place of business are paradigm . . . bases for general j urisdict ion.” ) I t ’s not enough t hat a defendant corporat ion has “ sizable sales” in a forum as “ [ s] uch exorbit ant exercises of all- purpose j urisdict ion would scarcely perm it out - of- st at e defendant s ‘t o st ruct ure t heir prim ary conduct wit h som e m inim um assurance as t o where t hat conduct will and will not render t hem liable t o suit .’” Daim ler AG, 571 U.S. at 139 ( quot ing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 ( 1985) ) . The plaint iff concedes t hat Kansas is not t he place of Chrom alox’s incorporat ion or principal business. But , t he plaint iff argues t hat Chrom alox has sales t o Kansas in excess of one m illion dollars each of t he last five years, 1 has m ore t han 100 hundred Kansas cust om ers, advert ises it self as having a global presence and as having a Kansas represent at ive, and em ploys an applicat ion engineer who lives in Kansas and provides t echnical support t o Kansas cust om ers. These are not t he kind, qualit y and quant it y of “ cont inuous corporat e operat ions wit hin a st at e [ t hat are] so subst ant ial and of such a nat ure as t o j ust ify suit . . . on causes of act ion arising from dealings ent irely dist inct from t hose act ivit ies.” Daim ler AG, 571 U.S. at 138 ( quot ing I nt ernat ional Shoe Co. v. Washingt on, 326 U.S. 310, 318 ( 1945) ) . Considered t oget her, t hese fact s ut t erly fail t o show t hat 1 Chromalox in reply not es t hat it s Kansas sales “ represent less t han 1% of it s t ot al annual sales.” ECF# 61, n. 6. 5 Chrom alox’s presence in Kansas is equivalent t o “ one in which t he corporat ion is fairly regarded as at hom e.” Brist ol- Myers Squibb, 137 S. Ct . at 1780. Nat ionwide sales, including som e t o t he forum in quest ion, are insufficient for general j urisdict ion. Goodyear Dunlop Tires Ops., 564 U.S. 915, 929 ( 2011) . “ As I nt ernat ional Shoe it self t eaches, a corporat ion's ‘cont inuous act ivit y of som e sort s wit hin a st at e is not enough t o support t he dem and t hat t he corporat ion be am enable t o suit s unrelat ed t o t hat act ivit y.’” Daim ler AG, 571 U.S. at 132 ( quot ing I nt ernat ional Shoe, 326 U.S. at 318) . Sent ry has only shown som e cont inuous act ivit y and sales in Kansas but not hing so subst ant ial on which t o base general j urisdict ion consist ent wit h t he above cont rolling precedent . The plaint iff’s “ st ream of com m erce argum ent s are t o no avail for general j urisdict ion.” Eaves v. Pirelli Tire, LLC, No. 13- 1271- SAC, 2014 WL 1883791, at * 9 ( D. Kan. May 12, 2014) . I n cont rast t o general j urisdict ion, specific exist s “ only for claim s relat ed t o t he defendant ’s cont act s wit h t he forum .” XMission, 955 F.3d at 840 ( cit at ion om it t ed) . The rat ionale is t hat a non- resident has engaged “ in som e purposive conduct direct ed at t he forum st at e” for which consent t o be sued for claim s arising from t hat very conduct is deem ed t o have been given. I d. “ Specific j urisdict ion is proper if ( 1) t he out - of- st at e defendant purposefully direct ed it s act ivit ies at resident s of t he forum St at e, and ( 2) t he plaint iff’s alleged inj uries arise out of or relat e t o t hose act ivit ies.” XMission, 955 F.3d at 840 ( int ernal quot at ion m arks and cit at ions om it t ed) . 6 The plaint iff assert s t hat Chrom alox put t he heat ing elem ent int o t he st ream of com m erce by shipping it t o Tennessee and, t hen based on it s ot her cont act s t o Kansas, could reasonably expect t he heat ing elem ent would be purchased by consum ers in Kansas. The plaint iff does lit t le m ore t han assert t his t heory and fails t o discuss any current and cont rolling precedent support ing it s applicat ion here. The plaint iff’s t heory cannot prevail because of t he second requirem ent t o personal j urisdict ion which exist s “ t o ensure t hat t here is an adequat e link bet ween t he forum St at e and claim s at issue, regardless of t he ext ent of defendant ’s ot her act ivit ies connect ed t o t he forum .” I d. The Suprem e Court in Brist ol- Myers explained t his requirem ent as a set t led principle of specific j urisdict ion: I n order for a court t o exercise specific j urisdict ion over a claim , t here m ust be an “ affiliat ion bet ween t he forum and t he underlying cont roversy, principally, [ an] act ivit y or an occurrence t hat t akes place in t he forum St at e.” Goodyear, 564 U.S., at 919, 131 S.Ct . 2846 ( int ernal quot at ion m arks and bracket s in original om it t ed) . When t here is no such connect ion, specific j urisdict ion is lacking regardless of t he ext ent of a defendant 's unconnect ed act ivit ies in t he St at e. See id., at 931, n. 6, 131 S.Ct . 2846 ( “ [ E] ven regularly occurring sales of a product in a St at e do not j ust ify t he exercise of j urisdict ion over a claim unrelat ed t o t hose sales” ) . 137 S. Ct . at 1781. Therefore, t his connect ion required bet ween t he forum and t he claim s in cont roversy are not relaxed or sat isfied by t he defendant corporat ion’s ot her forum cont act s t hat are unrelat ed t o t hese claim s. I d. 7 Under t he guise of st ream of com m erce, t he plaint iff is assert ing specific j urisdict ion based on Chrom alox’s solicit at ion and sales act ivit ies t o t hird part ies in t he St at e of Kansas. I ndeed, t he plaint iff adm it s t hat t he heat ing elem ent in quest ion was not m anufact ured, sold or shipped by Chrom alox in Kansas and t hat t he t ransact ion in quest ion “ occurred beyond Kansas borders.” ECF# 62, p. 6. Chrom alox’s sales relat ionships wit h t hird part ies in Kansas are not enough for specific j urisdict ion. This is t rue not wit hst anding t he plaint iff’s general allegat ions of a st ream of com m erce t heory. 2 As t he Suprem e Court has explained, “ a defendant ’s relat ionship wit h a . . . t hird part y, st anding alone, is an insufficient basis for j urisdict ion.” Brist ol- Myers, 137 S. Ct . at 1781. The plaint iff’s own adm ission est ablishes t hat t he heat ing elem ent s in quest ion were not shipped or sold direct ly by Chrom alox int o Kansas, but Tennessee. There is no allegat ion or evidence t hat t he Chrom alox cont rolled or direct ed t his lat er sale and shipm ent t o Kansas. The plaint iff has failed t o show how Chrom alox’s Kansas- relat ed cont act s were eit her “ in t he causal chain leading t o t he plaint iff’s inj ury” or “ relevant t o t he m erit s of t he plaint iff’s claim .” Tom ellari v. MEDL Mobile, I nc., 657 Fed. Appx. 793, 796 ( 10t h Cir. Aug. 3. 2016) ( discussed and applied t he 2 Summarizing t he holding in J. MccInt ryre Machinery, Lt d. v. Nicast ro, 564 U.S. 873 (2011), t he Tent h Circuit said t hat “ six Just ices emphasized t hat personal j urisdict ion did not exist simply because of a def endant ’ s awareness t hat it s product s could, t hrough t he st ream of commerce, end up in t he f orum St at e.” XMission, 955 F.3d at 843. 8 st andards of but - for causat ion or proxim at e cause for t he requirem ent of an inj ury arising out of Kansas cont act s) . Thus, t he plaint iff is unable t o m ake a prim a facie case of specific j urisdict ion, because it cannot show t hat it s claim s arise from Chrom alox’s cont act s wit h Kansas. See But ler v. Daim ler Trucks N.A., LLC, 433 F. Supp. 3d 1216, 1232- 33 ( D. Kan. 2020) ( “ [ A] ny exercise of specifc j urisdict ion m ust be based on DTNA’s [ defendant ’s] suit relat ed cont act s wit h Kansas.” And t he plaint iff did not show any of t he defendant ’s Kansas- relat ed act ivit ies were part of t he causal chain or were suit - relat ed act ivit ies) ; Dernick v. Cobra King I ndust ry Co., Lt d., No. 182217- MSK- KLM, 2020 WL 5893412, at * 5 ( D. Colo. Oct . 5, 2020) ( Even if t he t hird- part y shipm ent s could sat isfy t he purposeful direct ion requirem ent , t he plaint iff is st ill “ required t o show t hat his claim s arise from t hat cont act .” And t he defendant here did not m ake or cont rol t he shipm ent of t he aut om obile part t o Colorado) . The court does not have specific j urisdict ion over Chrom alox. I T I S THEREFORE ORDERED t hat t he defendant Chrom alox’s m ot ion t o dism iss t he plaint iff’s first am ended com plaint for lack of personal j urisdict ion ( ECF# 42) is grant ed. Dat ed t his 28t h day of Decem ber, 2020, Topeka, Kansas. / s Sam A. Crow___________________ Sam A. Crow, U.S. Dist rict Senior Judge 9
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