Salt River Project Agricultural Improvement and Power District v. Trench France SAS et al

Filing 56

ORDER granting in part and denying in part 11 Motion to Dismiss for Lack of Jurisdiction; granting in part and denying in part 15 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge David G Campbell on 11/29/2017.(DGC, nvo)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Salt River Project Agricultural Improvement and Power District, 10 Plaintiff, 11 12 13 No. CV-17-01468-PHX-DGC ORDER v. Trench France SAS, et al., Defendants. 14 15 16 Plaintiff Salt River Project filed a complaint against Defendants Trench Limited 17 (“Trench-Canada”) and Trench France, S.A.S (“Trench-France”) for a May 2015 18 explosion at its Santan Generating Station. Doc. 1. Defendants moved to dismiss the 19 complaint for lack of personal jurisdiction. Docs. 11, 15. At a subsequent hearing, the 20 Court granted Plaintiff’s request for limited jurisdictional discovery. Doc. 26. Plaintiff 21 completed that discovery and filed its response. Doc. 44. The motions are fully briefed, 22 and oral argument will not aid the Court’s decision. 23 LRCiv 7.2(f). For the reasons that follow, the Court will grant the motion in part. 24 I. See Fed. R. Civ. P. 78(b); Background. 25 Plaintiff alleges that it sustained damages probably caused by Trench bushing 26 explosions in 2008, 2010, and 2011. Doc. 1 ¶ 8. Trench-France designed the bushings 27 and Trench-Canada manufactured them. Doc. 11 at 20; Doc. 15 at 20. Trench-Canada 28 sold the bushings to Austria-based VA Tech EBG Transformatoren, GmbH & Co. (“VA 1 Tech”) in 2003. Doc. 15 at 20. Plaintiff subsequently purchased VA Tech transformers 2 which included the Trench bushings as component parts. Defendants were not party to 3 this purchase agreement (Doc. 11 at 20; Doc. 15 at 20), but Trench-Canada has sold 4 bushings in Arizona as recently as 2012 through an independent sales representative 5 (Doc. 11 at 21; see Doc. 55-1 at 2-23 (filed under seal)). Its last sale of bushings to 6 Plaintiff was in 2010, although those bushings are not involved in this case. Doc. 11 at 7 21. 8 9 In response to the first two explosions, Trench-France and Trench-Canada engineers visited Plaintiff’s facilities on April 28, 2010. Doc. 1 ¶ 9. Defendants 10 transported the failed bushings from Plaintiff’s facilities to plants in France and Canada 11 for testing. See Doc. 45-1 at 17-18; Doc. 55-1 at 44 (filed under seal). In 2014, Trench- 12 Canada requested testing data from Plaintiff. See Doc. 55-1 at 86-89 (filed under seal). 13 Trench-Canada investigated similar bushing failures at other Arizona energy companies 14 in 2011, 2012, and 2013. See Docs. 55-1 at 43-83, 55-2 at 10- 19 (filed under seal).1 15 Plaintiff decided in 2012 to replace all high-voltage (230 kV and 500 kV) Trench 16 bushings in its system. Doc. 1 ¶ 12. Trench-France subsequently published a 2014 17 safety advisory that some 230 kV Trench bushings had unusually high failure rates, 18 causing fires and explosions. 19 Defendants to determine the reliability of their lower-voltage bushings. Doc. 1 ¶ 14. 20 Pursuant to Defendants’ recommendations, Plaintiff installed monitors on multiple 21 Trench bushings, including 69 kV bushings at the Santan Generating Station. Doc. 1. 22 ¶ 14. The monitors, manufactured by Defendant Doble Engineering Company, were 23 designed to warn Plaintiff of imminent bushing failures. Doc. 1 ¶ 14. Doc. 1 ¶ 13; Doc. 45-13. Plaintiff then contacted 24 On May 15, 2015, a Trench 69 kV bushing at Plaintiff’s Santan Generating Station 25 exploded without warning, causing approximately three million dollars in damages. 26 27 1 28 Plaintiff asserts that Trench communicated the investigation’s conclusions, but Plaintiff does not identify whether that communication came from Trench-France or Trench-Canada. Doc. 45-1 at 18-19. -2- 1 Doc. 1 ¶ 15. Plaintiff filed this action alleging negligence and strict products liability 2 against Defendants. Doc. 1 ¶¶ 19-43. 3 II. Legal Standard. 4 To withstand a 12(b)(2) motion, the plaintiff must show that the defendant is 5 properly subject to the court’s jurisdiction. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 6 F.3d 1218, 1223 (9th Cir. 2011). “Where, as here, the defendant’s motion is based on 7 written materials rather than an evidentiary hearing, the plaintiff need only make a prima 8 facie showing of jurisdictional facts to withstand the motion to dismiss.” Id. “The 9 plaintiff cannot ‘simply rest on the bare allegations of its complaint,’ but uncontroverted 10 allegations in the complaint must be taken as true.” Id. (quoting Schwarzenegger v. Fred 11 Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). In ruling on such a motion, the 12 Court considers the pleadings and any materials submitted by the parties, accepting as 13 true any uncontroverted allegations in the complaint and resolving any factual conflicts in 14 the plaintiff’s favor. Id. 15 III. Discussion. 16 Arizona’s long-arm statute, Ariz. R. Civ. P. 4.2(a), applies in this diversity action. 17 See Terracom v. Valley Nat’l Bank, 49 F.3d 555, 559 (9th Cir. 1995). Rule 4.2(a) 18 “provides for personal jurisdiction co-extensive with the limits of federal due process.” 19 Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997). “[A] corporation may 20 be subject to personal jurisdiction only when its contacts with the forum support either 21 specific or general jurisdiction.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1068 (9th 22 Cir. 2014) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945)). 23 Plaintiff argues that Defendants are subject to specific jurisdiction. See Doc. 44. 24 Specific jurisdiction exists if a foreign corporation’s contacts with the forum give rise or 25 relate to the cause of action before the Court. 26 Ct. 746, 754 (2014). The Ninth Circuit employs a three-prong test to determine whether 27 a non-resident has sufficient minimum contacts for specific jurisdiction: 28 -3- Daimler AG v. Bauman, 134 S. 1 2 3 4 (1) [T]he defendant must either purposefully direct his activities toward the forum or purposefully avail himself of the privileges of conducting activities in the forum; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 5 6 Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1068 (9th Cir. 2017). Plaintiff 7 has the burden of satisfying the first two elements. Id. If it does, Defendants must show 8 that the exercise of jurisdiction would be unreasonable. Id. at 1068-69. 9 As an initial matter, the Court will not impute Trench-Canada’s forum contacts to 10 Trench-France and vice versa. “[W]here a parent and a subsidiary are separate and 11 distinct corporate entities, the presence of one in a forum state may not be attributed to 12 the other.” Id. at 1071 (internal quotation marks omitted). Plaintiff does not contend 13 otherwise. 14 Plaintiff argues that Defendants’ investigation of failed bushings in Arizona, 15 including its contacts with Plaintiff, combine to trigger specific jurisdiction. Doc. 44 16 at 11-13. Defendants counter that the only contacts relevant to this products liability case 17 are those surrounding Plaintiff’s acquisition of the Trench bushings. Doc. 11 at 8-9; 18 Doc. 15 at 8-9; Doc. 47 at 4-7. Because there are no such contacts, Defendants argue, the 19 Court lacks personal jurisdiction. 20 contacts cannot form the basis for personal jurisdiction. Id. Defendants contend that, in 21 any event, the alleged harm did not arise out of the investigatory contacts between 2010 22 and 2014. Doc. 11 at 10-12; Doc. 15 at 10-12. Id. Defendants further argue that post-incident 23 The Court will address these arguments claim-by-claim. See Bristol-Myers Squibb 24 Co. v. Superior Court of Cal., 137 S. Ct. 1773, 1781 (2017) (there must be “a connection 25 between the forum and the specific claims at issue”). The complaint includes negligence 26 and strict product liability claims for the design and manufacturing of the bushings. 27 Doc. 1 ¶¶ 19-43. It also alleges negligence and strict product liability claims for failure 28 to warn Plaintiff about the bushings’ risks. Id. ¶¶ 21-23, 27-29, 33-35, 40-42. -4- 1 A. 2 Where, as here, the complaint sounds in tort, the inquiry under the first prong is Purposeful Direction. 3 whether a defendant purposefully directed its activities at the forum state. 4 Foods, 874 F.3d at 1069. This requirement, sometimes referred to as the “effects test,” is 5 satisfied when a defendant (1) commits an intentional act, (2) expressly aimed at the 6 forum, (3) which causes foreseeable harm in the forum. Id. The effects test does not 7 automatically authorize specific jurisdiction over a foreign act with foreseeable effects in 8 the forum state. See Axiom Foods, 874 F.3d at 1070 (citing Wash. Shoe Co. v. A-Z 9 Sporting Goods Inc., 704 F.3d 668, 675 (9th Cir. 2012)). Nor does the effects test mean 10 that specific jurisdiction may be based solely on a defendant’s knowledge that the object 11 of his tortious activity resides in a particular state. See id. at 1069-70. “The proper 12 question is not where the plaintiff experienced a particular injury or effect but whether 13 the defendant’s conduct connects him to the forum in a meaningful way.” Walden v. 14 Fiore, 134 S. Ct. 1115, 1125 (2014). The Court must always focus on the “relationship 15 among the defendant, the forum, and the litigation.” Id. at 1126. 16 17 18 19 1. Axiom Intentional Act. The parties do not dispute that Defendants’ contacts with the forum were intentional. 2. Expressly Aimed at the Forum. 20 Trench-France has sufficient contacts expressly aimed at the forum. Trench- 21 France visited Plaintiff’s Arizona facilities in 2010 and transported failed bushings to 22 France for analysis. It also responded to Plaintiff’s request for recommendations on low- 23 voltage bushings. 24 The U.S. Supreme Court cautioned in Walden v. Fiore that the “plaintiff cannot be 25 the only link between the defendant and the forum,” 134 S. Ct. at 1122, but this case is 26 distinguishable. In Walden, the defendant was a Georgia police officer who seized 27 Nevada residents’ money in Georgia and wrote a false affidavit to justify the seizure. Id. 28 at 1119-20. Although the Nevada residents felt the harm in Nevada, “no part of [the -5- 1 defendant’s] course of conduct occurred in Nevada.” Id. at 1124-25. The contacts were 2 therefore not expressly aimed at the forum. Id. at 1126. 3 In Picot v. Weston, 780 F.3d 1206 (9th Cir. 2015), the Ninth Circuit applied the 4 principles of Walden to find no express aiming at California where the defendant acted 5 “from his residence in Michigan, without entering California, contacting any person in 6 California, or otherwise reaching out to California.” Id. at 1215. Similarly, in Axiom 7 Foods the Ninth Circuit declined to find express aiming at California where at most ten 8 of a tortious newsletter’s 343 recipients were physically located in California, and the 9 defendant conducted no business in California. 874 F.3d at 1070-71. The Ninth Circuit 10 reasoned “[i]t can hardly be said that ‘California [wa]s the focal point both of the 11 [newsletter] and of the harm suffered.’” Id. (quoting Walden, 134 S. Ct. at 1123). 12 The facts here are different. Trench-France repeatedly reached into Arizona. It 13 visited Plaintiff’s Arizona facilities in 2010, took failed bushings from Arizona to France 14 for analysis, and provided advice to Plaintiff – an Arizona company – in 2014. All of this 15 conduct focused on bushings located in Arizona. Trench-France does not argue that 16 Plaintiff initiated all of this contact. The Court finds that Trench-France expressly aimed 17 conduct at Arizona. 18 Trench-Canada has even more contacts with the forum. It used an independent 19 agent to facilitate bushing sales in Arizona as recently as 2012, and it sold bushings to 20 Plaintiff as recently as 2010. It visited Plaintiff’s Arizona facilities in 2010, investigated 21 bushing failures at three Arizona companies between 2010 and 2014, and transported 22 failed bushings to Canada for analysis. Trench-Canada also provided advice to Plaintiff 23 in 2014. 24 3. Harm in the Forum. 25 To establish purposeful direction, Plaintiffs must show that Defendants knew they 26 were causing harm likely to be suffered in Arizona. This “element is satisfied when 27 defendant’s intentional act has foreseeable effects in the forum,” and can even be 28 established if “the bulk of the harm occurs outside of the forum.” Brayton Purcell LLP v. -6- 1 Recordon & Recordon, 606 F.3d 1124, 1131 (9th Cir. 2010) (internal quotation marks 2 omitted). “In order to establish specific jurisdiction, a plaintiff must also show that 3 jurisdictionally significant harm was suffered in the forum state.” Mavrix, 647 F.3d 4 at 1231. 5 Defendants’ investigation and recommendations caused foreseeable harm in 6 Arizona. Defendants knew or should have known that their investigations – and the 7 recommendations that resulted – could cause harm in Arizona to the extent they informed 8 infrastructure decisions by Arizona companies. 9 B. Arising Out Of. 10 Purposeful direction is not enough. The claims in this case must also arise out of 11 Defendants’ contacts with Arizona. The Ninth Circuit uses a “but for” test. A claim 12 arises out of a defendant’s forum contacts if, “but for” the contacts, the cause of action 13 would not have arisen. Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007). 14 The negligence and strict liability claims premised on negligent design and 15 manufacturing do not arise out of Defendants’ contacts with the forum. These claims 16 allege that the bushings were negligently designed and manufactured at the time of their 17 sale in 2003, and Plaintiff presents no facts to substantiate any relationship between 18 Defendants and the forum in or before 2003. Thus, to the extent they allege negligent 19 design and manufacturing, the Court dismisses Counts One through Four. 20 But the negligence and strict liability claims premised on failure to warn do arise 21 out of Defendants’ contacts with the forum. 22 Plaintiff’s facilities in 2010 and subsequent investigation did not cause the explosion. 23 The complaint, however, alleges that these contacts informed Defendants of the risks 24 associated with the bushings. And despite ample opportunity to do so, including a direct 25 communication of advice to Plaintiff in 2014, Defendants failed to convey the risks 26 associated with the low-voltage bushings. Plaintiff argues that it relied on Defendants’ 27 deficient warnings to retain the low-voltage bushing that eventually exploded in 28 -7- Defendants argue that their visit to 1 May 2015. This claim would not have arisen but for Defendants’ failure to warn during 2 its Arizona investigation and communications. 3 Defendants cite cases suggesting that post-incident contacts cannot trigger 4 jurisdiction. But in both Magna Powertrain and Nevada Power Company, the plaintiff 5 attempted to rely on a defendant’s post-incident contacts to establish personal jurisdiction 6 over a lawsuit concerning the incident itself. Magna Powertrain De Mex. S.A. De C.V. v. 7 Momentive Performance Materials USA LLC, 192 F. Supp. 3d 824, 831 (E.D. 8 Mich. 2016) (court held that “plaintiff’s claims did not arise from contacts that occurred 9 after the actual harm”); Nev. Power Co. v. Trench Fr. SAS, No. 2:15-CV-264 JCM 10 (NJK), 2015 WL 6737015, at *3 (D. Nev. Nov. 2, 2015) (“Trench France’s forum-related 11 contacts occurred after, and in response to, the 2011 fire which gave rise to this action”). 12 Although Defendants made contacts with Arizona in response to the 2008 and 2010 13 explosions, Plaintiff has not sued Defendants for damages associated with those 14 explosions. Plaintiff’s claims relate to the 2015 explosion, and Defendants’ contacts 15 occurred before that event. 16 C. 17 Because Plaintiff has made a prima facie case of personal jurisdiction on its failure 18 to warn claims, the burden shifts to Defendants to show that the exercise of jurisdiction 19 would be unreasonable. Axiom Foods, 874 F.3d at 1068-69. Defendants do not argue 20 that personal jurisdiction would be unreasonable. See Docs. 11, 15, 47. The Court 21 therefore finds that the exercise of personal jurisdiction is reasonable.2 Reasonableness. 22 IT IS ORDERED: 23 1. 24 Defendants Trench-France and Trench-Canada’s motions to dismiss (Docs. 11, 15) are granted in part. Counts One through Four are dismissed to the extent 25 26 27 28 2 Plaintiff requests an opportunity for a second round of discovery regarding personal jurisdiction, but Plaintiff has identified no unresolved issue that would alter the Court’s decision on personal jurisdiction. The Court will set a litigation schedule that affords reasonable time for merits discovery. -8- 1 they allege negligent design or manufacturing, and survive to the extent they allege a 2 failure to warn. 3 2. 4 Dated this 29th day of November, 2017. The Court will set a case management conference by separate order. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-

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