Umoe Schat-Harding, Inc. et al v. PT Schneider Electric Manufacturing Batam

Filing 28

ORDER re: 23 Motion to Dismiss for Lack of Jurisdiction. The motion is granted to the extent it seeks dismissal without prejudice and is otherwise denied. This action is dismissed without prejudice. Signed by District Judge William H. Steele on 4/5/2018. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
UMOE SCHAT-HARDING, INC., et al.,)
)
Plaintiffs,
)
)
v.
) CIVIL ACTION 17-0193-WS-N
)
PT SCHNEIDER ELECTRIC
)
MANUFACTURING BATAM,
)
et al.,
)
)
Defendant.
)
ORDER
This matter is before the Court on the defendant’s motion to dismiss for
lack of personal jurisdiction. (Doc. 23). The parties have submitted briefs and
evidentiary materials in support of their respective positions, (Docs. 23, 26, 27),
and the motion is ripe for resolution.1 After careful consideration, the Court
concludes the motion to dismiss is due to be granted in part and denied in part.
BACKGROUND
The plaintiff in the underlying admiralty action (“Istre”), which was filed in
the Eastern District of Louisiana, sued the plaintiffs herein (“UMOE”), and others,
including his employer (“Montco”) for injuries he sustained when a rescue boat
being hoisted aboard a work vessel (“the Vessel”) fell and struck him. The Vessel
was built for Montco at a Bayou La Batre shipyard; UMOE supplied the davit
system for the Vessel. Istre claimed the davit’s cable snapped due to UMOE’s
employment of an improper limit switch (“the Switch”). UMOE filed a thirdparty demand against the defendant herein (“Batam”), the manufacturer of the
1

The defendant’s request for oral argument, (Doc. 24), construed as a motion for
such relief, is denied. Civil Local Rule 7(h).

Switch. Batam successfully pursued a motion to dismiss for lack of personal
jurisdiction.
Once all other claims were resolved in Louisiana, Istre and UMOE had
their remnant of the action transferred to this District. Without objection, the
Court severed UMOE’s newly re-asserted third-party claim against Batam and
opened this separate civil action, after UMOE predicted that service of process
would consume more than a year.
DISCUSSION
“A plaintiff seeking to establish personal jurisdiction over a nonresident
defendant bears the initial burden of alleging in the complaint sufficient facts to
make out a prima facie case of jurisdiction.” Louis Vuitton Malletier, S.A. v.
Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (internal quotes omitted). “When a
defendant challenges personal jurisdiction by submitting affidavit evidence in
support of its position, the burden traditionally shifts back to the plaintiff to
produce evidence supporting jurisdiction,” unless “the defendant's affidavits
contain only conclusory assertions that the defendant is not subject to
jurisdiction.” Id. (internal quotes omitted). “Where the plaintiff’s complaint and
supporting evidence conflict with the defendant’s affidavits, the court must
construe all reasonable inferences in favor of the plaintiff.” Meier ex rel. Meier v.
Sun International Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002); accord
Diamond Crystal Brands, Inc. v. Food Movers International, Inc., 593 F.3d 1249,
1257 (11th Cir. 2010).
An evidentiary hearing on a motion to dismiss for lack of personal
jurisdiction is discretionary, not mandatory. E.g., Snow v. DirecTV, Inc., 450 F.3d
1314, 1317 (11th Cir. 2008). Because the parties have not requested an evidentiary
hearing, the Court exercises its discretion not to conduct one. Absent such a
hearing, the plaintiff’s burden is to present enough evidence, construed most
favorably to the plaintiff, to withstand a motion for directed verdict. Id.
2

The facts regarding the Switch, according to UMOE, are as follows. Batam
is an Indonesian subsidiary of Schneider Electric (“Schneider”), which is a global
enterprise with hundreds of related companies. Batam manufactured the Switch, a
Telemecanique XS7C40FP260, in Indonesia. Batam produces many such limit
switches, which bear stamps reflecting international and United States ratings for
sealing effectiveness.
Batam individually packaged and bulk shipped over a thousand of these
limit switches, including the Switch, to a Schneider subsidiary’s international
distribution center in France. (Doc. 26-4). The Switch and others were then
shipped to a different Schneider subsidiary’s regional distribution center in
Hungary. (Doc. 26-3 at 7-8). This entity sold a dozen limit switches, including
the Switch, to Q-Electrik, (Doc. 26-5), a retailer apparently located in the Czech
Republic and unaffiliated with Schneider.
Meanwhile, UMOE issued drawings for construction of the davit system,
which specified use of Telemecanique XS7C40FP260 limit switches. In the
Czech Republic, an entity related to UMOE (“UMOE As”) issued a purchase
order for same to a Czech supplier (“ABB”), (Doc. 26-8), which acquired two
limit switches, including the Switch, from Q-Electrik. The limit switches were
invoiced and delivered to another UMOE entity in the Czech Republic (“UMOE
s.r.o.”), (Doc. 26-9), which then shipped the davit system, along with the limit
switches in their original packaging, to the shipyard in Bayou La Batre. (Doc. 2610). There the switches were incorporated into the davit system and the davit
system into the Vessel.2
2

Batam insists that the Court must credit the Louisiana judge’s statement that the
Switch was incorporated into the davit system while still in the Czech Republic. (Doc.
27 at 5-6). Batam identifies no legal principle requiring the Court to give preclusive
effect to her statement, especially given that it was unnecessary to her ruling and that
Batam can cite to no evidence clearly supporting the proposition. As noted, on motion to
dismiss it is the plaintiff’s version of the evidence that controls, and UMOE has offered
evidence supporting its position. (Doc. 26-10 at 2-3). While Batam complains that the
declaration could be read as artfully skirting the question, it can reasonably (indeed, more
3

UMOE relies on additional evidence to establish personal jurisdiction over
Batam. Schneider through its subsidiaries maintains two international distribution
centers, one in France and the other in Singapore. The international distribution
center in France (to which the Switch was shipped by Batam) receives products
from various Schneider subsidiary manufacturing locations and redistributes them
among a number of Schneider subsidiary regional distribution centers around the
world, including those of a Schneider subsidiary (“Schneider USA”) in Texas,
Ohio and Pennsylvania. (Doc. 26-3 at 9-12). Batam also ships some limit
switches directly to Schneider USA. (Doc. 23-1 at 2). Schneider through
unidentified subsidiaries maintains two sales offices in Alabama and services
southeast Alabama through a third office located in Panama City, Florida. (Doc.
26-12). UMOE has not conducted jurisdictional discovery to determine the
volume of actual sales in Alabama, but while the action was pending in the
Eastern District of Louisiana, UMOE conducted such discovery as to Louisiana
and learned that over 200 Telemecanique XS7C40FP260 limit switches
manufactured by Batam were sold to Louisiana retailers between 2008 and 2012.
(Doc. 26-11 at 9, 24, 37, 50, 61).
A forum state’s personal jurisdiction over a defendant may be either general
or specific. “A court may assert general jurisdiction … to hear any and all claims
against [foreign entities] when their affiliations with the State are so continuous
and systematic as to render them essentially at home in the forum State.”
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)
(internal quotes omitted). That is, if general jurisdiction exists, the foreign entity
is subject to suit in the forum state even if the cause of action asserted against it is
wholly unrelated to its activities in the state. Walden v. Flore, 134 S. Ct. 1115,
1121 n.6 (2014). “But only a limited set of affiliations with a forum will render a
reasonably) be read as negating the Switch’s incorporation into the davit system before
both arrived in Alabama. As noted, the plaintiff on motion to dismiss obtains the benefit
of that reasonable reading.
4

defendant amenable to general jurisdiction in that State.” Bristol-Myers Squibb
Co. v. Superior Court, 137 S. Ct. 1773, 1780 (2017) (internal quotes omitted).
The “at home” limitation means the defendant’s contacts with the forum must be
such that it is “comparable to a domestic enterprise in that State.” Daimler AG v.
Bauman, 134 S. Ct. 746, 758 n.11 (2014). Faced with this daunting burden,
UMOE prudently confines its argument to specific jurisdiction. (Doc. 26 at 1325).
“[A] State may authorize its courts to exercise personal jurisdiction over an
out-of-state defendant if the defendant has certain minimum contacts with the
State such that the maintenance of the suit does not offend traditional notions of
fair play and substantial justice.” Goodyear Dunlop, 564 U.S. at 923. That is, “[a]
defendant is constitutionally amenable to a forum’s specific jurisdiction if it
possesses sufficient minimum contacts with the forum to satisfy due process
requirements, and if the forum’s exercise of jurisdiction comports with traditional
notions of fair play and substantial justice.” Vermeulen v. Renault, U.S.A., Inc.,
985 F.2d 1534, 1545 (11th Cir. 1993) (internal quotes omitted). The first question
is thus whether Batam has sufficient minimum contacts with Alabama to support
the exercise of specific jurisdiction over it in this forum.
“To constitute constitutionally minimum contacts, the defendant’s
contacts with the applicable forum must satisfy three criteria. First, the contacts
must be related to the plaintiff’s cause of action or have given rise to it.”
Vermeulen, 985 F.2d at 1546. “Second, the contacts must involve some act by
which the defendant purposefully avails itself of the privilege of conducting
activities within the forum ..., thus invoking the benefits and protections of its
laws.” Id. (internal quotes omitted). “Third, the defendant’s contacts with the
forum must be such that [the defendant] should reasonably anticipate being haled
into court there.” Id. (internal quotes omitted).
To satisfy these criteria, UMOE relies on a “stream of commerce” theory.
(Doc. 26 at 14-25). The Supreme Court fashioned this term in World-Wide
5

Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), ruling that “[t]he forum State
does not exceed its powers under the Due Process Clause if it asserts personal
jurisdiction over a corporation that delivers its products into the stream of
commerce with the expectation that they will be purchased by consumers in the
forum State.” Id. at 297. UMOE argues that the Switch entered the stream of
commerce in Indonesia and did not leave the stream of commerce until it was
incorporated into the Vessel in Alabama.
The World-Wide Volkswagen Court did not define “stream of commerce.”
In a later opinion, a four-Justice plurality3 stated that the term “refers to the
movement of goods from manufacturers through distributors to consumers.” J.
McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 881 (2011) (Kennedy, J.). A
different four Justices4 described the term as “refer[ring] not to unpredictable
currents or eddies, but to the regular and anticipated flow of products from
manufacture to distribution to retail sale.” Asahi Metal Industry Co. v. Superior
Court, 480 U.S. 102, 116 (1987) (Brennan, J., concurring in part and concurring in
the judgment). UMOE cites both McIntyre and Asahi, (Doc. 26 at 15-16, 20), and
it identifies no more lenient definition of the term than is contained in those cases.
The Court therefore assumes for purposes of the instant motion that the stream-ofcommerce theory requires that: (1) the forum state is where the product reaches
the retail consumer; and (2) the product’s path to the forum state follows the
regular and anticipated flow of such products from the defendant manufacturer.
Batam asserts that UMOE has “admi[tted]” the Switch left the stream of
commerce when it was acquired by Q-Electrik in the Czech Republic. (Doc. 27 at
5). The Court can find no such admission in UMOE’s brief; on the contrary,
UMOE insists that the Switch “exited the stream of commerce in Alabama.”
(Doc. 26 at 22).
3

Justices Kennedy, Scalia and Thomas and Chief Justice Roberts.

4

Justices Brennan, White, Marshall and Blackmun.
6

Batam also argues the Switch left the stream of commerce when ABB
delivered it to UMOE s.r.o., that transfer occurring in the Czech Republic. (Doc.
23-2 at 4). Batam’s argument, however, expressly rests on the premise that
UMOE s.r.o. incorporated the Switch into the davit system in the Czech Republic,
such as to make that entity the “end user” of the Switch. (Id.). As noted, however,
UMOE’s evidence is to the contrary, and UMOE’s version of the facts controls on
motion to dismiss.
Where any stream of commerce ends depends on who is the “consumer” of
the product via “retail sale.” When the product at issue is itself an ultimate
product such as a vehicle, the product reasonably is viewed as remaining in the
stream of commerce from manufacturer to distributor to dealership to retail
purchaser/consumer. This was the case in World-Wide Volkswagen.
Perhaps less clear is the identity of the consumer via retail sale of a product
(e.g., a limit switch) that is a component part of a larger or more intricate product
(e.g., a davit system), which itself may be a component part of another product
(e.g., a vessel), and so on. Here it is undisputed that UMOE s.r.o. acquired the
Switch in the Czech Republic via retail sale. As noted, however, Batam does not
argue that UMOE s.r.o. is the relevant consumer by virtue of having acquired the
Switch from a retailer; instead, Batam argues that UMOE s.r.o. is the relevant
consumer because it “consumed” the Switch by incorporating it into the davit
system. As also noted, that argument fails at this stage due to UMOE’s evidence
that the Switch was not incorporated into the davit system before it reached
Alabama. The Court therefore need not decide whether the stream of commerce
with respect to a component part can or does end upon its incorporation into a
different product, and the Court assumes for present purposes that the Switch, if it
was in the stream of commerce when it reached UMOE s.r.o., could remain there
until it reached Alabama.
More problematic for UMOE is whether the Switch traveled from
Indonesia to Alabama through a “regular and anticipated” stream or through an
7

“unpredictable curren[t] or edd[y].” As noted, UMOE has evidence that
Telemecanique XS7C40FP260 limit switches like the Switch reach Louisiana in
significant quantities. That evidence, along with UMOE’s evidence that Schneider
USA has three regional distribution centers in the United States and that an
unidentified Schneider subsidiary maintains sales offices in and for the Alabama
market, creates a reasonable inference that Batam’s Telemecanique
XS7C40FP260 limit switches reach Alabama through a regular and anticipated
stream. The stream has two regular and anticipated tributaries: one flowing from
Indonesia to France to Schneider USA’s regional distribution centers and on to
Alabama, and the other flowing from Indonesia directly to those distribution
centers and on to Alabama. Had the Switch reached Alabama through either of
those routes, it would have done so via the “regular and anticipated flow of
[Batam’s] products” from manufacture through distribution to retail sale.
That, however, is not the route the Switch took. Instead, the Switch went
from Indonesia to France to Hungary to the Czech Republic to Alabama. Only the
first leg of that complicated journey parallels Batam’s stream of commerce to
Alabama. UMOE has no explanation how the subsequent stages in that journey
could be part of Batam’s stream of commerce to Alabama.5 UMOE does not
suggest that this circuitous European flow is a common or even non-unique route
for Batam’s products to reach Alabama, and it thus must be seen as an
unpredictable current or eddy rather than as the stream of commerce.
Batam relies on D’Jamoos v. Pilatus Aircraft Ltd., 566 F.3d 94 (3rd Cir.
2009). (Doc. 27 at 5).6 To reach the United States market, the defendant foreign
manufacturer utilized a Colorado-based subsidiary, which sold aircraft to regional
5

The Switch’s travel from France to Hungary and on to the Czech Republic may
be part of Batam’s stream of commerce to parts of Europe, but it is not part of the stream
of commerce to Alabama.
6

Batam did not cite D’Jamoos in its principal brief, but it cited and discussed at
length Hinrichs v. General Motors of Canada, Ltd., 222 So. 3d 1114 (Ala. 2016), which
in turn discussed D’Jamoos in detail. Id. at 1138-1140.
8

independent dealers for sale to retail customers around the country. Id. at 98. The
subject aircraft did not enter Pennsylvania (or even the United States) in this
fashion. Instead, the defendant sold the aircraft to a French buyer, which sold it to
a Swiss buyer, which sold it to a Massachusetts buyer, which sold it to a Rhode
Island buyer; the aircraft then crashed while flying over Pennsylvania. Id. at 99.
The plaintiffs relied on a stream-of-commerce theory, which the Third Circuit
rejected because the subject aircraft did not enter Pennsylvania through the
“stream,” or “regular and anticipated path” to that state (i.e., via the normal
distribution channel), but “by a series of fortuitous circumstances independent of
any distribution channel” the manufacturer employed. Id. at 105-06 (citing Justice
Brennan’s opinion in Asahi).
This case is on all fours with D’Jamoos. As in that case, a foreign
defendant manufacturer utilized a regular distribution system bringing its product
to the forum state, but the product at issue arrived in the forum state not through
that system but from a series of fortuitous circumstances7 independent of that
distribution system. Because the Switch did not reach Alabama through the
stream of commerce, UMOE cannot successfully rely on that theory to establish
personal jurisdiction.
UMOE does not directly address this “absolutely fatal” flaw in its
argument. D’Jamoos, 566 F.3d at 105. Instead, it stresses that Batam, by means
of the distribution system described above, purposefully availed itself of the
privilege of conducting activities in Alabama. Assuming without deciding that
UMOE has or could demonstrate purposeful availment in this fashion, its streamof-commerce theory still fails because, in order for them to satisfy due process, the
contacts constituting purposeful availment must be the same contacts that relate to
the plaintiff’s cause of action or that give rise to it. J. McIntyre Machinery, 564
U.S. at 882 (Kennedy, J.); Vermeulen, 985 F.2d at 1546. UMOE’s cause of action
7

These include: shipment to Hungary; sale to Q-Electrik; sale to ABB; sale to
UMOE s.r.o.; and shipment to Alabama.
9

is completely unrelated to Batam’s established distribution system for reaching the
Alabama market, since the Switch reached Alabama independently of that system.
As the Third Circuit observed, to allow contacts with the forum based on the
manufacturer’s normal distribution scheme to support specific jurisdiction over a
claim based on a product that did not reach the state via that scheme
“impermissibly would remove the ‘arising from or related to’ requirement from
the specific jurisdiction test and unjustifiably would treat the stream-of-commerce
theory as a source of general jurisdiction.” 566 F.3d at 106.8
Without filing a motion for such relief, UMOE requests an opportunity to
conduct limited jurisdictional discovery before the Court rules on Batam’s motion
to dismiss. (Doc. 26 at 27-28). The proposed discovery is targeted towards
“Schneider’s extensive distribution network and [Batam’s] reasonable
expectations regarding the markets into which its products may enter.” (Id. at 28).
While certain of UMOE’s proposed interrogatories and requests for production
appear relevant to whether the established distribution system for its products
reflects Batam’s purposeful availment of the privilege of conducting activities in
Alabama, (Doc. 26-13), none of them bear at all on whether the Switch’s
circuitous and random journey to Alabama represents the stream of commerce for
Batam’s products. Because the requested discovery could not possibly alter the
resolution of Batam’s motion to dismiss, UMOE’s request for jurisdictional
discovery, construed as a motion for such relief, is denied.
Batam attacks personal jurisdiction on a number of additional fronts.
Because the foregoing discussion is dispositive, the Court pretermits discussion of
those arguments.
Batam seeks dismissal with prejudice. (Doc. 23-2 at 14). This is
impermissible; a dismissal for lack of personal jurisdiction must be without
prejudice, which “does not preclude further litigation of [the plaintiff’s] claims on
8

UMOE concedes that stream-of-commerce theory is relevant only to specific
jurisdiction, and it disavows any reliance on general jurisdiction. (Doc. 26 at 13-14).
10

the merits, but it does preclude that litigation from occurring in” the forum where
dismissal occurred. Posner v. Essex Insurance Co., 178 F.3d 1209, 12221 (11th
Cir. 1999).
For the reasons set forth above, Batam’s motion to dismiss is granted to
the extent it seeks dismissal without prejudice and is otherwise denied. This
action is dismissed without prejudice.
DONE and ORDERED this 5th day of April, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE

11