Walsh v. LG Chem America et al
Filing
66
ORDER granting 33 Defendant LG Chem Ltd.'s Motion to Dismiss for Lack of Personal Jurisdiction. (See attached order for additional information.) Signed by Judge Steven P. Logan on 9/13/2019. (RMW)
1
WO
2
3
4
5
6
IN THE UNITED STATES DISTRICT COURT
7
FOR THE DISTRICT OF ARIZONA
8
Christopher Walsh,
9
10
Plaintiff,
vs.
11
12
LG Chem America, et al.,
Defendants.
13
14
17
No. CV-18-01545-PHX-SPL
ORDER
Before the Court is Defendant LG Chem, Ltd.’s Motion to Dismiss (Doc. 33).
15
16
)
)
)
)
)
)
)
)
)
)
)
)
Having considered the briefing (Docs. 33, 40, 41),1 the Court rules as follows.
I.
Background
18
On October 28, 2019, Plaintiff purchased two LG HG2 18650 (“HG2”) batteries
19
from retailer Oueis Gas in Mesa, Arizona (Doc. 30 at ¶¶ 8–9). The HG2 batteries were
20
designed, manufactured, tested, marketed, and sold by LG Chem, a company based in
21
Seoul, South Korea (Doc. 30 at ¶ 2, 8).
22
On November 18, 2016, while sitting at a table in a restaurant, the subject batteries
23
exploded and set Plaintiff on fire (Doc. 30 at ¶ 10). Plaintiff spent two weeks in a burn
24
unit, underwent physical therapy, missed two months of work, incurred over $170,000 in
25
medical bills, and ultimately suffered third-degree burns over 8% of his body (Doc. 30 at
26
27
28
1
Because it would not assist in resolution of the instant issues, the Court finds the
pending motion is suitable for decision without oral argument. See LRCiv. 7.2(f); Fed. R.
Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).
1
¶ 11).
2
Plaintiff initiated this product liability action, alleging four causes of action: (1)
3
negligent design, (2) negligent failure to warn, (3) strict liability/design defect, and (4)
4
strict liability/information defect (Docs. 1, 30). Defendant LG Chem now moves to dismiss
5
the claims against it for lack of personal jurisdiction (Doc. 33).
6
II.
Legal Standard
7
A “[p]laintiff bears the burden of establishing personal jurisdiction.” Repwest Ins.
8
Co. v. Praetorian Ins. Co., 890 F. Supp. 2d 1168, 1184 (D. Ariz. 2012). When a defendant
9
moves to dismiss a complaint for lack of personal jurisdiction, “the plaintiff is ‘obligated
10
to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction’”
11
over the defendant. Cummings v. W. Trial Lawyers Ass’n, 133 F. Supp. 2d 1144, 1151 (D.
12
Ariz. 2001) (citation omitted). “Where, as here, the defendant’s motion is based on written
13
materials rather than an evidentiary hearing, the plaintiff need only make a prima facie
14
showing of jurisdictional facts to withstand a motion to dismiss.” Mavrix Photo, Inc. v.
15
Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). The Court may not, however,
16
“assume the truth of allegations in a pleading that are controverted by affidavit.” Id.
17
(citation omitted).
18
Because no applicable federal statute governing personal jurisdiction exists,
19
Arizona’s long-arm statute applies. See Terracom v. Valley Nat’l Bank, 49 F.3d 555, 559
20
(9th Cir. 1995). Arizona’s long-arm statute provides for personal jurisdiction “to the
21
maximum extent permitted by the Arizona Constitution and the United States
22
Constitution.” Ariz. R. Civ. P. 4.2(a). Ultimately, “the jurisdictional analyses under state
23
law and federal due process are the same.” Schwarzenegger v. Fred Martin Motor Co.,
24
374 F.3d 797, 801 (9th Cir. 2004). Absent traditional bases for personal jurisdiction, the
25
Due Process Clause requires that a nonresident have certain minimum contacts with the
26
forum state such that the exercise of personal jurisdiction “does not offend traditional
27
notions of fair play and substantial justice.” Id. (quoting Int’l Shoe Co. v. Washington, 326
28
U.S. 310, 316 (1945)). “In determining whether a defendant had minimum contacts[,] . . .
2
1
courts focus on ‘the relationship among the defendant, the forum, and the litigation.’”
2
Brink v. First Credit Res., 57 F. Supp. 2d 848, 860 (D. Ariz. 1999). “Depending on the
3
nature and extent of the defendant’s contacts with the forum state, the court may exercise
4
either general or specific jurisdiction over the defendant.” Id.
5
Here, Plaintiff does not allege that LG Chem is subject to general jurisdiction (Doc.
6
40 at 2, § III(A)). Instead, Plaintiff alleges that LG Chem is subject to specific jurisdiction
7
(Doc. 40 at 2, § III(A)–(C)). In determining whether a defendant has contacts with the
8
forum state sufficient to establish specific jurisdiction, courts apply a three-prong test:
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
(1) The non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he purposefully
avails himself of the privilege of conducting activities in the
forum, thereby invoking the benefits and protections of its
laws; (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.
Schwarzenegger, 374 F.3d at 802. Plaintiff bears the burden of satisfying the first two
prongs. Id. If Plaintiff succeeds, the burden shifts to Defendant to “present a compelling
case” that the exercise of specific jurisdiction would be unreasonable. Id.
A. Purposeful Availment & Purposeful Direction
The first prong of the test “may be satisfied by purposeful availment of the privilege
of doing business in the forum; by purposeful direction of activities at the forum; or some
combination thereof.” Yaoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433
F.3d 1199, 1206 (9th Cir. 2006). “Purposeful availment requires that the defendant engage
in some form of affirmative conduct allowing or promoting the transaction of business
within the forum state. This focus upon the affirmative conduct of the defendant is
designed to ensure that the defendant is not haled into court as the result of random,
fortuitous or attenuated contacts.” Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.2d
758, 760 (9th Cir. 1990) (citation omitted). Ultimately, a defendant is found to have
purposefully availed himself of the forum’s benefits if he has intentionally “engaged in
28
3
1
significant activities within a State or has created ‘continuing obligations’ between himself
2
and the residents of the forum.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S.
3
462, 476 (1985)). In contrast, purposeful direction is evaluated using the “effects test”
4
articulated in Calder v. Jones, 465 U.S. 783 (1984), which assesses whether the defendant
5
has “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing
6
harm that the defendant knows is likely to be suffered in the forum state.” Dole Food Co.,
7
Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). “A purposeful availment analysis is
8
most often used in suits sounding in contract. A purposeful direction analysis, on the other
9
hand, is most often used in suits sounding in tort.” Schwarzenegger v. Fred Martin Motor
10
Co., 374 F.3d 797, 802 (9th Cir. 2004) (internal citation omitted). Because the Calder
11
effects test only applies to intentional torts, however, the Court will analyze the first prong
12
using the purposeful availment test. See J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873,
13
880 (2011) (“In products-liability cases like this one, it is the defendant’s purposeful
14
availment that makes jurisdiction consistent with ‘traditional notions of fair play and
15
substantial justice.’”); Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 460
16
(9th Cir. 2007) (“[I]t is well established that the Calder test applies only to intentional torts,
17
not to the breach of contract and negligence claims presented here.”).
18
Defendant argues that Plaintiff’s negligence and strict liability claims are based
19
solely on a stream-of-commerce argument, which is insufficient to establish specific
20
jurisdiction (Doc. 8-9):
21
22
23
24
25
26
27
The placement of a product into the stream of commerce,
without more, is not an act purposefully directed toward a
forum state. Even a defendant’s awareness that the stream of
commerce may or will sweep the product into the forum state
does not convert the mere act of placing the product into the
stream of commerce into an act purposefully directed toward
the forum state.
Holland Am. Line, Inc., 485 F.3d at 459. Plaintiff, on the other hand, argues that Defendant
engaged in purposeful availment in: (1) setting design and manufacturing specifications,
(2) getting the product to a United States distributor, (3) filing patent applications, (4)
28
4
1
testing the product, (5) non product specific advertisement, (6) selling a large quantity of
2
the product, and (7) litigating in Arizona (Doc. 40 at 6-7).
3
First, there is nothing in the record to indicate that Defendant designs, manufactures,
4
tests, or maintains the HG2 batteries anywhere in the United States, let alone in Arizona
5
(see Doc. 33-1 at ¶ 17; Doc. 44. at ¶ 3). See Carpenter v. Sikorsky Aircraft Corp., 101
6
F.Supp.3d 911, 923 (C.D. Cal. 2015) (noting there were “no allegations that any part of the
7
[product] was manufactured, designed or maintained [in the forum state].”). Next, once
8
Defendant sold its product to distributors, it relinquished all control of the product to those
9
independent corporations (Doc. 33-1 at ¶¶ 18, 20, 27).2 Defendant was not involved in the
10
distribution process, nor was it involved in any direct marketing to consumers. 3 To the
11
extent Plaintiff argues that the sale of thirteen million units annually in the United States is
12
a strong indication of purposeful availment, this stream-of commerce argument, without
13
more, in unavailing. See Ariz. Sch. Risk Retention Trust, Inc. v. NMTC, Inc., 169 F.Supp.3d
14
2
15
16
17
18
19
20
21
22
23
24
25
26
27
28
To the extent Plaintiff alleges that Defendant transferred product specifically to
Super Engine, an Arizona distributor, the claim is solely supported by allegations in a
complaint in an unrelated federal case. See State Farm Fire & Cas. Co. v. Amazon.com
Inc., 2:17-cv-01994-JAT at Doc. 72. Accordingly, the Court finds that argument to be
unpersuasive. See Quanta Indem. Co. v. Amberwood Dev. Inc., No. CV-11-01807-PHXJAT, 2014 WL 1246144, at *18 n.28 (D. Ariz. Mar. 26, 2014) (“[T]he allegations of a
complaint are not admissible evidence to prove the truth of those allegations because the
drafter of a non-verified complaint has no knowledge of the facts alleged.”). To the extent
Plaintiff alleges that Defendant licenses Arizona service providers, the website referenced
specifically refers to Energy Storage System partners, has no specific reference to the HG2
batteries, and provides no evidence that Defendant “owns, controls, or has any kind of
economic relationship whatsoever with the [product] service centers located in the forum.”
Cottle v. W. Skyways, Inc., No. 1:17-cv-00049-DAD-BAM, 2017 WL 1383277, at *5 (E.D.
Cal. April 18, 2017) (see Doc. 40-1 at ¶ 5); LG Chem, ESS Battery Division,
https://www.lgesspartner.com/front/normal/en/product/productInstaller.dev (last visited
September 12, 2019).
The Court further finds Plaintiff’s reference to non-product specific advertising to
be equally unavailing. “[T]he likelihood that personal jurisdiction can be constitutionally
exercised is directly proportionate to the nature and quality of commercial activity that an
entity conducts over the internet.” Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419
(9th Cir. 1997) (citation omitted). Plaintiff’s reference does not reveal that Defendant has
in any way conducted commercial activity over the internet in Arizona—the link does not
permit sales, nor does it target Arizona consumers. In fact, only 7 of the 31 images are in
English. See LG Chem, Advertisements, https://www.lgchem.com/global/lg-chemcompany/information-center/advertising-media (last visited Sept. 12, 2019). Accordingly,
the Court cannot find, based on the digital marketing materials, that Defendant deliberately
directed any marketing efforts toward the forum state.
3
5
1
931, 939 (D. Ariz. 2016) (“[A] stream of commerce approach that dispenses with an
2
examination and weighing of the nonresident defendant’s contacts with the forum and that
3
imposes personal jurisdiction on no more than the defendant’s use of a national distributor
4
which directs the product of any quantity to the forum must be rejected.” (emphasis
5
added)). Finally, the Court finds the references to other litigation in Arizona to be
6
inapposite, as Defendant maintained its defense of lack of personal jurisdiction within those
7
actions (Doc. 41-1 at ¶ 71, 41-2 at ¶ 9) . See State Farm Fire & Cas. Co. v. Amazon.com
8
Inc., et al., 2:17-cv-01994-JAT at Doc. 13, ¶ 71 (filed July 30, 2018); Garcia, et al. v. The
9
Vapor Shop, et al., No. CV2016-052257 (May 19, 2017).
10
The Court agrees with Plaintiff, however, that Defendant’s 11 patents and 11
11
additional patent applications related to the HG2 batteries is a strong indicator of
12
purposeful availment (Doc. 40-1 at ¶ 6). See Deprenyl Animal Health, Inc. v. Univ. of
13
Toronto Innovations Found., 297 F.3d 1343, 1353 (Fed. Cir. 2002) (“Obtaining such a
14
patent is a meaningful contact with the United States; it requires a patentee purposefully
15
avail him or herself of a significant benefit of the United States law.”). Accordingly, the
16
Court finds the first prong of the specific jurisdiction test is satisfied.
B. Arising From Forum-Related Activities
17
18
The second prong of the specific jurisdiction test “explores the relationship between
19
the cause of plaintiff’s harm and the defendant’s acts identified as creating purposeful
20
contacts with the forum state.” Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987). “The .
21
. . test is met if ‘but for’ the contacts between the defendant and the forum state, the cause
22
of action would not have arisen.” Terracom v. Valley Nat’l Bank, 49 F.3d 555, 561 (9th
23
Cir. 1995). Under the present circumstances, the Court cannot conclude that Plaintiff
24
would not have sustained his injury but for Defendant’s patents and patent applications.
25
Accordingly, the Court finds that Plaintiff has failed to meet his burden for establishing
26
specific jurisdiction.
27
///
28
///
6
1
2
3
IT IS THEREFORE ORDERED that Defendant LG Chem Ltd.’s Motion to
Dismiss for Lack of Personal Jurisdiction (Doc. 33) is granted.
Dated this 13th day of September, 2019.
4
5
Honorable Steven P. Logan
United States District Judge
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?