Frye et al v. Ulrich GMBH & Co. KG et al
MEMORANDUM OPINION AND ORDER directing as follows: (1) that def's 4 motion to dismiss is granted and all claims against Ulrich USA are DISMISSED without prejudice; (2) that def's 5 motion to quash is GRANTED and the purported service of process on Ulrich GmbH is QUASHED; and (3) plfs shall effect service of process on Ulrich GmbH in compliance with the Hague Convention and the FRCP on or before 6/30/09, as further set out in order. Signed by Hon. Chief Judge Mark E. Fuller on 3/25/09. (djy, )
IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA E A S T E R N DIVISION R IC H A R D EDWARD FRYE and F R A U K E SHEPHARD-FRYE, P L A IN T IF F S , v. U L R IC H GMBH & CO. KG, and U L R IC H MEDICAL, USA, INC., D EFEN D A N TS. ) ) ) ) ) ) ) ) ) ) )
C A S E NO. 3:08-cv-158-MEF (W O D o Not Publish)
MEMORANDUM OPINION AND ORDER T h is Case is currently before the Court on a Motion to Dismiss for Lack of Personal J u ris d ic tio n (Doc. # 4), filed on March 6, 2008 by Defendant Ulrich Medical, USA, Inc. ("Ulrich USA"), and a Motion to Quash (Doc. # 5), filed the same day by Defendant Ulrich G m b H & Co. KG ("Ulrich GmbH"). For the reasons set forth in this Memorandum Opinion a n d Order, both Motions are due to be GRANTED. I. FACTS AND PROCEDURAL HISTORY P la in tif f s filed this action on January 23, 2008 in the Circuit Court of Macon County, A la b a m a . Plaintiffs allege that Plaintiff Richard Edward Frye ("Frye") was injured when a m e d ic a l device known as an Anterior Distraction Device Plus ("ADD Plus") "malfunctioned a n d broke." Plaintiff Frauke Shephard-Frye ("Shephard-Frye"), who is married to Frye, a lle g e d ly suffers from loss of consortium as a result of her husband's condition. D e f e n d a n ts are Ulrich GmbH, a corporation organized and operating under the laws
of the Federal Republic of Germany, and Ulrich USA, a Delaware corporation with its p rin c ip a l place of business in Missouri. Ulrich USA is a subsidiary of Ulrich GmbH. A copy o f the summons and complaint was sent by certified mail to both Ulrich GmbH and Ulrich U S A at the latter's address in Missouri. Defendants removed the case to this Court on March 6 , 2008. (Doc. # 1.) Ulrich GmbH markets the ADD Plus to United States Service personnel around the w o rl d even though the ADD Plus is not approved by the United States Food and Drug A d m in is tra tio n . Frye is one such servicemember, and a physician installed an ADD Plus in F rye 's back at the Euromed Clinic in Germany while Frye was serving in the United States A rm y in that country. Ulrich GmbH designed, manufactured, and distributed the ADD Plus th a t was implanted in Frye's back. Ulrich USA is the exclusive distributor of Ulrich GmbH products in the United States. The products and devices sold by Ulrich USA are designed and manufactured in Germany b y Ulrich GmbH; Ulrich USA does not design or manufacture any products. Ulrich USA is n o t registered to do business in Alabama and has made no sales in the State of Alabama since its incorporation in January 2006. Ulrich USA has no offices, factories, real or personal p ro p e rty, product inventory, bank accounts, post office boxes, or other assets of any kind in A la b a m a . Ulrich USA also has no employees and no sales or distribution network in A la b a m a . In fact, no Ulrich USA employees have traveled to Alabama for the purpose of s e llin g , marketing, or distributing products. Ulrich USA has never sold a product or device to any person or entity in Alabama, and Ulrich USA has made no attempts to do so. As such,
Ulrich USA does not have any customers in Alabama. Ulrich USA has never before been s u e d or brought suit in Alabama. Ulrich USA has no connection to the Euromed Clinic where Dr. E-M Buscholz in s ta lle d the ADD Plus in Frye's back. Dr. Buscholz is not and has never been an employee o f Ulrich USA. Ulrich USA did not design, manufacture, sell, distribute, or warrant Frye's A D D Plus, and, in fact, does not design, manufacture, sell, distribute, or warrant the ADD P lu s device, either domestically or in Germany. Indeed, because it is not FDA approved, the A D D Plus has never been distributed in the United States. The ADD Plus that was installed in Frye's back in Germany in 2006 malfunctioned w h ile he was in Tuskegee, Alabama in February, 2007. He was subsequently informed that s u rg e ry would be required to remove the broken ADD Plus. Frye and Frye's physicians then c o n ta c te d Ulrich GmbH in either February or March of 2007 to obtain information about re m o v a l of the ADD Plus. In response, Ulrich GmbH supplied Frye's physicians with s p e c ia liz e d surgical instruments. Additionally, Dr. Helmut Schoenhoeffer
(" S c h o e n h o e f f e r" ), a Vice President of Ulrich USA and an expert in spine surgery and spinal s ys te m s , was asked to and did consult with Frye and his physicians prior to the surgery. Specifically, Kara Todd ("Todd"), the surgery scheduler at Neurospine of Dothan, c o m m u n ic a te d with Schoenhoeffer and Daniela Fiesel ("Fiesel"), who is a customer service m a n a g e r for Ulrich GmbH. Feisel told Todd to contact either herself or Schoenhoeffer if she n e e d e d further assistance and to return the specialized surgical instruments to Ulrich USA.
The telephonic and electronic communication between Schoenhoeffer and Todd, which o c c u rre d after the ADD Plus malfunctioned, was the only contact Ulrich USA had with A la b a m a . A physician associated with Neurospine of Dothan ultimately removed the ADD Plus f ro m Frye's back on March 27, 2007 at Flowers Hospital in Dothan, Alabama. II . STANDARD FOR MOTION TO DISMISS FOR LACK OF PERSONAL J U R IS D IC T IO N In the context of a motion to dismiss for lack of personal jurisdiction in which no e v id e n tia ry hearing is held, the plaintiff bears the burden of establishing a prima facie case o f jurisdiction over the movant, non-resident defendant. Morris v. SSE, Inc., 843 F.2d 489, 4 9 2 (11th Cir. 1988). A prima facie case is established if the plaintiff presents sufficient e v id e n c e to defeat a motion for a directed verdict. Id. at 492. The court must construe the a lle g a tio n s in the complaint as true, to the extent they are uncontroverted by defendant's a f f id a v its or deposition testimony. Id. Moreover, where the evidence presented by the p a rtie s ' affidavits and deposition testimony conflicts, the court must construe all reasonable in f e re n c e s in favor of the non-movant plaintiff. Delong Equip. Co. v. Wash. Mills Abrasive C o ., 840 F.2d 843, 845 (11th Cir.1988). I I I . DISCUSSION A . Personal Jurisdiction over Ulrich USA D e f e n d a n t Ulrich USA has moved to dismiss the claims against it for lack of personal ju ris d ic tio n . A federal district court sitting in diversity may exercise personal jurisdiction to 4
the extent authorized by the law of the state in which it sits and to the extent allowed under th e Constitution. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002). The d e te rm in a tio n of personal jurisdiction over a nonresident defendant thus requires a two-part a n a lys is . First, the court must determine whether the forum state's long-arm statute provides a basis for jurisdiction. See Cable/Home Comm. Corp. v. Network Productions, Inc., 902 F .2 d 829, 855 (11th Cir. 1990). If so, the court must ascertain whether or not sufficient " m in im u m contacts" exist to satisfy the Due Process Clause of the Fourteenth Amendment s o that "maintenance of the suit does not offend `traditional notions of fair play and s u b s ta n tia l justice.'" Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quoting Milliken v. M e y e r , 311 U.S. 457, 463 (1940)); see also Cable/Home Comm., 902 F.2d at 855. As for the first step, Alabama's long-arm statute provides for the exercise of personal ju ris d ic tio n over the defendant to the full extent permissible under the due process clause of th e Fourteenth Amendment. Ala. R. Civ. P. 4.2 ("An appropriate basis exists for service of p ro c e s s outside of this state upon a person or entity in any action in this state when the person o r entity has such contacts with this state that the prosecution of the action against the person o r entity in this state is not inconsistent with the constitution of this state or the Constitution o f the United States"); see also Olivier v. Merritt Dredging Co., Inc., 979 F.2d 827, 830 (1 1 th Cir. 1992) (citing Ala. Waterproofing Co., Inc. v. Hanby, 431 So.2d 141, 145 (Ala. 1 9 8 3 )). Consequently, if the second step is satisfied, then so is the first. Id. For the second step in the personal jurisdiction inquiry, the nonresident defendant's
establishing "minimum contacts" in the forum state remains the "constitutional touchstone." B u rg e r King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985); Int'l Shoe Co., 326 U.S. at 316; see also Cable/Home Comm., 902 F.2d at 858-89.1 Additionally, however, even after a court h a s decided that a defendant has established minimum contacts within a forum state, these c o n ta c ts may be considered in light of other factors to determine whether the assertion of p e rs o n a l jurisdiction would comport with "fair play and substantial justice." Olivier, 979 F.2d a t 834 (citing Burger King, 471 U.S. at 476). If not, the Court lacks jurisdiction. Defendant Ulrich USA argues that this Court lacks personal jurisdiction over it b e c a u s e Ulrich USA is not subject to general personal jurisdiction in Alabama, the contacts U lric h USA did have with Alabama occurred after the accrual of Plaintiffs' cause of action a n d therefore are not causally related to this action, and Ulrich USA did not purposefully d ire c t its activities to or in Alabama. Defendants also argue that the contacts Ulrich USA had w ith Alabama would not lead it to expect to be haled into court in the state, and that, in any e v e n t, exercising jurisdiction over Ulrich USA does not comport with traditional notions of f a ir play and substantial justice. For their part, Plaintiffs contend that this Court has personal ju ris d ic tio n over Ulrich USA because it is an "agent or alter ego" of Ulrich GmbH or,
T h e re are two types of personal jurisdiction: specific and general. Specific p e rs o n a l jurisdiction is founded on a party's contacts with the forum state that are related to the cause of action. Helicopteros Nacionales de Colombia, N.A. v. Hall, 466 U.S. 408, 4 1 4 n.8 & 9 (1984). General personal jurisdiction arises from a party's contacts with the f o ru m state that are unrelated to the litigation. Id. Because there is no plausible support f o r general jurisdiction over Ulrich USA, the Court addresses (and Plaintiffs argue for) o n ly specific jurisdiction. 6
alternately, that Ulrich USA has sufficient minimum contacts to grant this court power over th e company. Plaintiff has not met its burden of establishing a prima facie case of personal ju ris d ic tio n over Ulrich USA. See Meir v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1268 (11th C ir. 2002). First, Ulrich USA does not have sufficient "minimum contacts" with Alabama to support the exercise of personal jurisdiction over it. Second, the exercise of jurisdiction o v e r Ulrich USA would not comport with traditional notions of fair play and substantial ju s tic e . Finally, Plaintiff's argument that Ulrich USA is subject to this Court's jurisdiction b e c a u s e Ulrich GmbH is subject to this Court's jurisdiction rests on a misapplication of the re le v a n t cases. 1. Minimum Contacts T h e familiar "minimum contacts" test is the cornerstone of the Supreme Court's p e rs o n a l jurisdiction jurisprudence, but the stone was not laid properly in this case. A d e f e n d a n t's contacts with the forum state must satisfy three criteria in order to support ju ris d ic tio n . Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (11th Cir. 1993). First, th e contacts must be related to the plaintiff's cause of action or have given rise to it. Id. at 1 5 4 6 . Second, the contacts must involve some act by which the defendant purposefully a v a ile d itself of the privilege of conducting activities within the forum state thus invoking th e benefits and protections of its laws. Id. Finally, the defendant's conduct with the forum s ta te must be such that the defendant should reasonably anticipate being haled into court
there. Id. Ulrich USA's contacts with Alabama are none of these things. First, the claim did not arise from the contacts between Ulrich USA and the State of Alabama.2 See Cable/Home Comm., 902 F.2d at 855. Plaintiffs' claims arise out of events th a t occurred in Germany,3 not those that took place in Alabama.4 Here, all contacts, related to this case or otherwise, between Ulrich USA and the forum state occurred after the injury o c c u rre d . The facts of this case illustrate clearly why contacts coming into existence after th e cause of action arose are usually not relevant. See Harlow, 432 F.3d at 62. Second, Ulrich USA did not purposefully avail itself of the privilege of conducting
" W h e n a claim arises out of or is related to a defendant's contacts with the forum s ta te , the court must consider the `relationship among the defendant, the forum, and the litig a tio n ' to determine whether the exercise of jurisdiction was consistent with due p ro c e s s ." Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1057 (1 1 th Cir. 1986).The consideration of these relationships is not entirely distinct from the in q u iry into purposeful availment and reasonable anticipation of being haled into court. In fact, all three are designed to ensure the exercise of jurisdiction comports with due p ro c e s s . Therefore, the relatedness inquiry relies upon contacts that gave rise to (i.e. were c a u s a lly connected with) the cause of action, involve a party conducting activity in the s ta te in such a way that lead to the accrual of the cause of action, or would lead the d e f e n d a n t to anticipate being haled into court. These considerations all concern activity a n d conduct prior to or surrounding the accrual of the cause of action. As a consequence, c o n ta c ts coming into existence after the cause of action are usually not relevant. Harlow v . Children's Hosp., 432 F.3d 50, 62 (1st Cir. 2005); see Borg-Warner Accept. Corp. v. L o v e tt & Thorpe, Inc., 786 F.2d 1055, 1062 (11th Cir. 1986); Rhodes v. Unisys Corp., 1 7 0 Fed. Appx. 681, 685 (11th Cir. 2006). Specifically, the design, manufacture, sale, distribution, and implantation of the ADD Plus, all of which happened in Germany. If, for example, Plaintiffs were making a claim that the advice provided by Ulrich USA in connection with the removal of the device violated some medical standard of care and resulted in injuries during the surgical removal of the device, the injury could have arisen from the contacts and those contacts might give rise to jurisdiction. This is not their claim, however. 8
activities within Alabama. Prior to the malfunction of the ADD Plus, Ulrich USA had no c o n ta c t whatever with Alabama. Ulrich USA has no offices, property, products, bank a c c o u n ts , post office boxes, or other assets in Alabama. Ulrich USA has no employees and n o sales apparatus in Alabama, and no Ulrich USA employees have ever traveled to Alabama f o r the purposes of selling, marketing, or distributing products. Consequently, Ulrich USA h a s no customers in Alabama. In no sense can it be said that Ulrich USA "purposefully d ire c te d " its activities to Alabama residents. See Cable/Home Comm., 902 F.2d at 855; B u rg e r King Corp., 471 U.S. at 472; Helicopteros, 466 U.S. at 414. Finally, it was unforeseeable, in the Constitutional sense, that Ulrich USA would be h a le d into court in Alabama. Ulrich USA had no contact whatever with Alabama before the A D D Plus malfunctioned. Indeed, there was no way for Ulrich USA to even know this d e v ic e was in the state of Alabama at all, and the only contacts Ulrich USA did have with the f o ru m state were in response to solicitations from Plaintiffs. As discussed above, Plaintiffs' c la im s arise out of events that occurred in Germany, and the mere fortuity of military re lo c a tio n landed an ADD Plus in Alabama. Moreover, the contacts between Ulrich USA a n d Alabama cannot "be such that [it] should reasonably anticipate being haled into court [ h ]e re " because they occurred after the injury. Id. In sum, the contacts between Ulrich USA and Alabama did not give rise to the injuries c o m p la in e d of by Plaintiffs because the contacts occurred after the injuries. Furthermore, U lric h USA did not purposefully avail itself of the privilege of conducting its activities in
Alabama and the absence of contacts prior to the injury makes it unforeseeable that Ulrich U S A would be haled into the courts in Alabama. Therefore, the Court lacks personal ju ris d ic tio n over this defendant and all claims against it are due to be dismissed with p re ju d ic e . 2 . Fair Play and Substantial Justice O n c e a court has decided that a defendant has established minimum contacts within a forum state, these contacts may be considered in light of other factors to determine whether th e assertion of personal jurisdiction would comport with "fair play and substantial justice." O liv ie r v. Merritt Dredging Co., 979 F.2d 827, 834 (11th Cir. 1992) (citing Burger King, 471 U .S . at 476). As the Supreme Court has stated, other factors may serve to establish the re a s o n a b le n e s s of personal jurisdiction upon a lesser showing of minimum contacts than w o u ld otherwise be required. Id. Some of these factors include: the plaintiff's interest in o b ta in in g convenient and effective relief, the interstate judicial system's interest in obtaining th e most efficient resolution of controversies, and the shared interest of the several states in f u rth e rin g fundamental substantive social policies. Id. The Court has considered these f a c to rs and has concluded that haling Ulrich USA into court in this state would violate tra d itio n a l notions of fair play and substantial justice. This is a second basis on which D e f e n d a n t's Motion is due to be granted and provides no basis for the exercise of jurisdiction u p o n a lesser showing of minimum contacts. 3. Plaintiffs' Position
Plaintiffs argue that this Court has personal jurisdiction over Ulrich USA because it is an agent of Ulrich GmbH. They rely on Meier v. Sun Intern. Hotels, Ltd., 288 F.3d 1264 (1 1 th Cir. 2002), Gulf Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d 1 4 9 9 (11th Cir. 1984), and United Elec. Radio and Mach. Workers of Am. v. 163 Pleasant S t. Corp., 987 F.2d 39 (1st Cir. 1993). This argument relies on a mistaken interpretation of th e agency cases. In Meier, the Eleventh Circuit explained that [g]enerally, a foreign parent corporation is not subject to the jurisdiction of a f o ru m state merely because a forum subsidiary is doing business there. On the o th e r hand, if the subsidiary is merely an agent through which the parent c o m p a n y conducts business in a particular jurisdiction or its separate corporate s ta tu s is formal only and without any semblance of individual identity, then the s u b s id ia ry's business will be viewed as that of the parent and the latter will be s a id to be doing business in the jurisdiction for purposes of asserting personal ju r is d ic tio n . Meier, 288 F.3d at 1272. Therefore, under Meier, a principal can be subjected to the ju ris d ic tio n of a court because of the actions of its agent. Gulf Coast Fans and United E le c tric Radio stand for similar propositions.5 What these cases do not say is that the agent c a n be subjected to jurisdiction because of the actions of the principal. This is Plaintiffs' a rg u m e n t, which is invalid because it turns the principal-agent relationship on its head. Moreover, and more central to the problem with exercising jurisdiction in this case, the
Gulf Coast Fans broadly stands for the same proposition, though it is weak precedent, as the Eleventh Circuit's holding was simply that the district court abused its discretion by failing to consider the question of personal jurisdiction over the principal in the context of a Rule 60(b) motion. See 740 F.2d at 1511. The Eleventh Circuit noted that the principal had a "very strong claim" that the district court lacked jurisdiction, and was "entitled to a definitive ruling" on the issue. Id. 11
contacts between Ulrich USA and Frye do not meet the minimum contacts requirement b e c a u s e the contacts arose from the injury rather than the other way around. By contrast, the c o n ta c ts in Meier and United Electric Radio met the due process requirements: the contacts th a t resulted in jurisdiction over the principal met the minimum contacts requirement because th e injuries arose from contacts. Therefore, Plaintiffs' arguments cannot support the exercise o f personal jurisdiction over Ulrich USA. B. Service of Process on Ulrich GmbH In a separate Motion to Quash, Defendant Ulrich GmbH requests an order from this C o u rt quashing Plaintiffs' attempt at service of process upon it because the service did not c o m p ly with the Hague Convention. Plaintiffs in their response "admit that service did not c o n f o rm to the guidelines of the Hague Convention." Therefore, Defendant's Motion is due to be granted. The facts surrounding this service of process are as follows: On January 23, 2008, P la in tif f filed the complaint, which requested service of process on defendant Ulrich GmbH a t "Buchbrunnenweg 12, 89081 Ulm, Germany." The Summons, however, requested service o f process on Ulrich GmbH at "225 Chesterfield Indus., St. Louis, MO 63005." A copy of th e summons and complaint was sent to Ulrich GmbH at the St. Louis address. Like the United States, the Federal Republic of Germany is a member of the Hague C o n v e n tio n on Service Abroad on Judicial and Extra-judicial Documents in Civil or C o m m e rc ia l Matters ("Hague Convention"). See Volkswagenwerk Aktiengesellschaft v.
Schlunk, 486 U.S. 694, 699 (1988); Art. 2, 20 U.S.T. 361, I.I.A.S. 6638, 658 U.N.T.S. 163. Ulrich GmbH is a corporation organized under the laws of the Federal Republic of Germany, s o service of process on it must be carried out according to the terms of the Hague C o n v e n tio n . See id.; Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for the S .D . of Iowa, 482 U.S. 522, 534 n.15 (1987); Fed. R. Civ. P. 4(f)(1) ("Unless federal law p ro v id e s otherwise, an individual . . . may be served at a place not within any judicial district o f the United states: (1) by any internationally agreed means of service that is reasonably c a lc u la te d to give notice, such as those authorized by the Hague Convention . . . ."), 4(h)(2) (" U n le s s federal law provides otherwise, . . . a domestic or foreign corporation . . . must be s e rv e d : (2) at a place not within any judicial district of the United States, in any manner p re s c rib e d by Rule 4(f) . . . "), 4(l)(2) ("Service not within any judicial district of the United S ta te s must be provided as follows: (A) if made under 4(f)(1), as provided in the applicable tre a ty or convention . . . "). Because the service of process on Ulrich GmbH does not comply w ith the Hague Convention as required, it is due to be quashed, and Defendant's Motion is d u e to be granted. V . CONCLUSION F o r the reasons set forth above, it is hereby ORDERED as follows: (1 ) That Defendant's Motion to Dismiss (Doc. # 4) is GRANTED and all claims a g a in s t Ulrich USA are DISMISSED without prejudice; (2 ) That Defendant's Motion to Quash (Doc. # 5) is GRANTED and the purported s e rv ic e of process on Ulrich GmbH is QUASHED; and (3 ) Plaintiffs shall effect service of process on Ulrich GmbH in compliance with the H a g u e Convention and the Federal Rules of Civil Procedure on or before June 30, 2009.
Upon failure to either properly effect service or show good cause why service was not made w ith in the specified time, the Court will dismiss the claims against Ulrich GmbH with p re ju d ic e without further notice pursuant to Rule 4(m). DONE this the 25th day of March, 2009. /s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE
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