Hart et al v. Bed Bath & Beyond Inc.

Filing 118

MEMORANDUM OPINION. Signed by Judge Peter J. Messitte on 9/22/2014. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
REBECCA HART and
MICHAEL HART

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Plaintiffs
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v.
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BED BATH & BEYOND, INC., et al.
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Defendants
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BED BATH & BEYOND, INC.
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Third-Party Plaintiff
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v.
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NHG LIQUIDATION, INC. F/K/A
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NAPA HOME & GARDEN, INC., et al. *
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Third-Party Defendants
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Civil No. PJM 13-868

MEMORANDUM OPINION
Rebecca and Michael Hart have sued Bed Bath & Beyond, Inc. (“BBB”) for injuries
sustained as a result of their friends’ purchase and use of a product called “Firelites.” BBB has
in turn sued Losorea Packaging, Inc. (“Losorea”) for common law indemnification and
contribution,1 and in response Losorea has filed a Corrected Motion to Dismiss for Lack of
Personal Jurisdiction (Paper No. 33). The Court authorized jurisdictional discovery, asking the
parties to submit supplemental briefing, and held a hearing. Following oral argument, the Court
DEFERRED ruling on Losorea’s Motion and permitted further jurisdictional discovery and

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BBB has also sued NHG Liquidation, Inc., f/k/a Napa Home and Garden, Inc. (“Napa” or “Napa Home &
Garden”) for breach of contract (Count 1) and breach of express warranty (Count 2); Randolph and Julie Stephens
for common law indemnification and contribution (Count 3); and Napa, Fuel Barons, Inc. (“Fuel Barons”) and
Losorea for common law indemnification and contribution (Count 4) (Paper No. 19).

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further supplemental briefing. The Harts subsequently amended their Complaint to add Losorea,
Ashland, Inc. (“Ashland”), and CKS Packaging, Inc. (“CKS”) as direct Defendants to the action.
Various cross-claims followed.2
Losorea has now moved to dismiss the Harts’ Second Amended Complaint for lack of
personal jurisdiction, incorporating by reference the arguments Losorea set forth in support of its
Motion to Dismiss against BBB. The Harts adopt the arguments BBB made in opposition to
Losorea’s Motion to Dismiss filed against it. Losorea has also moved to dismiss BBB’s crossclaims for lack of personal jurisdiction, as well as on the grounds that the cross-claims are
duplicative of BBB’s third party claims. Having reviewed the parties’ pleadings, the Court
DENIES Defendant Losorea’s Corrected Motion to Dismiss for Lack of Personal Jurisdiction
(Paper No. 33), DENIES its Motion to Dismiss Second Amended Complaint Filed by Plaintiffs
for Lack of Personal Jurisdiction (Paper No. 92), and DENIES its Motion to Dismiss CrossClaims (Paper No. 99).
I.
The case arises out of a visit by the Harts to the home of their friends Randolph and Julie
Stephens in Calvert County, Maryland over the Memorial Day weekend in 2011. The Harts
were sitting outside near a “Firelites” firepot when one of their hosts began re-filling the pot with
citronella “pourable eco-fuel gel.” The “pourable eco-fuel gel” ignited, then allegedly exploded
into a six to eight foot fireball, which caused extensive burns to Rebecca Hart and singed
Michael Hart’s leg hair.
The Harts allege that the “Firelites” fire pot was purchased at BBB, that the “pourable
fuel-gel” was produced by Fuel Barons, and that the fuel gel and fire pot were packaged by

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BBB has filed cross-claims against Ashland, CKS, and Losorea (Paper No. 91). CKS has filed cross-claims
against BBB and against Randolph and Julie Stephens (Paper Nos. 103, 104).

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Losorea under the label of Napa Home & Garden. The Harts additionally allege that CKS
designed and manufactured the bottle caps used to seal the bottle of fuel gel, and that the fuel gel
contained a product (“Klucel®”) manufactured by Ashland as a gelling agent.
The Harts initially filed suit against BBB, which turn filed a Third Party Complaint
against Napa Home & Garden, Fuel Barons, Losorea, and Randolph and Julie Stephens. The
Harts’ Second Amended Complaint adds Losorea, Ashland, and CKS as direct Defendants.
Losorea has moved to dismiss all claims against it for lack of personal jurisdiction.
While the precise contours of Losorea’s involvement in the manufacturing or packaging
of the fuel gel remain in dispute, the parties agree that, while Losorea, a Georgia corporation, did
not directly sell the fuel pot and fuel gel to customers in Maryland, these components were still
sold through third-party distributors in this state.3 Losorea and BBB agree that, at a minimum,
Losorea contracted with Fuel Barons to package the fuel gel. The parties likewise agree that
Fuel Barons shipped the product to Napa, which supplied the product to BBB for nationwide
sale. BBB contends that Losorea did more than simply bottle the fuel gel, that it in fact
“manufactured” the gel. According to BBB, Losorea received components of the fuel gel from
various suppliers, blended the products pursuant to a formula, ensured that the ingredients were
proportioned appropriately, and tested the viscosity and quality of the gel, all in addition to
simply bottling the product. Losorea submits that Fuel Barons was the manufacturer of the fuel
gel, and that Losorea did not conduct any safety testing of the product.
All this said, the Court need not decide the extent of Losorea’s actual involvement with
the product in order to decide whether personal jurisdiction obtains in this Court.

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Losorea apparently became CyCan Industries in December 2012. According to Leigh Fragnoli, former CEO of
Losorea, Losorea’s assets were sold to CyCan in March 2013. The current President of CyCan is Ryan Dailey,
Fragnoli’s stepson. BBB Supplemental Br. in Opp. Ex. 12 (Paper No. 58) (Fragnoli Dep. 8:18-10:20).

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II.
“When a court's personal jurisdiction is properly challenged by a Rule 12(b)(2) motion,
the jurisdictional question thus raised is one for the judge, with the burden on the plaintiff
ultimately to prove the existence of a ground for jurisdiction by a preponderance of the
evidence.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
III.
A federal court in a diversity case may exercise personal jurisdiction over a non-resident
defendant if (1) the exercise of jurisdiction is authorized under the state's long-arm statute; and
(2) the exercise of jurisdiction comports with the due process requirements of the Fourteenth
Amendment. Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan, 259 F.3d 209,
215 (4th Cir. 2001). “The Maryland courts have consistently held that the state's long-arm
statute is coextensive with the limits of personal jurisdiction set by the due process clause of the
Constitution. Thus, our statutory inquiry merges with our constitutional inquiry.” Carefirst of
Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396-97 (4th Cir. 2003)
(citations omitted). The parties agree that a finding of personal jurisdiction here turns on the
limits of due process.
Consistent with due process, a court may subject non-resident defendants to judgment
only when defendants have “certain minimum contacts with it such that the maintenance of the
suit does not offend ‘traditional notions of fair play and substantial justice.’” International Shoe
Co. v. Washington., 326 U.S. 310, 316 (1945). If the claims “arise out of or are connected with
the activities within the state,” id. at 319, then those contacts may establish specific jurisdiction.
The Court considers: “(1) the extent to which the defendant has purposefully availed itself of the
privilege of conducting activities in the state; (2) whether the plaintiffs' claims arise out of those

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activities directed at the state; and (3) whether the exercise of personal jurisdiction would be
constitutionally ‘reasonable.’” Carefirst, 334 F.3d at 397. A court may exercise general
jurisdiction over a non-resident defendant who maintains “continuous and systematic” contacts
with the forum state, regardless of whether the claims “arise out of” the defendants’ activities in
the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).
The Fourth Circuit interpreted the Supreme Court’s so-called “stream of commerce”
doctrine in World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) and Asahi Metal
Industry Co. v. Superior Court of Cal., 480 U.S. 102, 107 (1987) and held that the relevant
question is “whether . . . the defendant has created a substantial connection to the forum state by
action purposefully directed toward the forum state or otherwise invoking the benefits and
protections of the laws of the state.” Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 945-46
(4th Cir. 1994).
In June 2011 the Supreme Court revisited its “stream of commerce” jurisprudence in J.
McIntyre Machinery Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). As in Asahi, the Supreme Court
did not produce a majority opinion. Justice Kennedy authored the plurality opinion, joined by
Chief Justice Roberts and Justices Scalia and Thomas. Under the plurality’s approach, a
“defendant’s transmission of goods permits the exercise of jurisdiction only where the defendant
can be said to have targeted the forum; as a general rule, it is not enough that the defendant
might have predicted that its goods will reach the forum State.” Id. at 2788 (emphasis added).
The plurality rejected “foreseeability [as] the touchstone of jurisdiction,” id., finding that instead
“it is the defendant’s actions, not his expectations, that empower a State’s courts to subject him
to judgment.” Id. at 2789. The inquiry, then, should focus on “whether a defendant has followed

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a course of conduct directed at the . . . jurisdiction of a given sovereign, so that the sovereign has
the power to subject the defendant to judgment concerning that conduct.” Id.
Justice Breyer, concurring, rejected what he saw as the plurality’s “strict no-jurisdiction
rule,” id. at 2793, and stated that “resolving this case requires no more than adhering to our
precedents.” Id. at 2792. He found that on the facts of McIntyre, it had not been shown that the
foreign manufacturer “purposefully availed itself of the privilege of conducting activities” within
the forum state, “or that it delivered its goods in the stream of commerce ‘with the expectation
that they will be purchased’” by its users. Id. at 2792 (quoting World-Wide Volkswagen, 444
U.S. at 297-98). He observed that while “many recent changes in commerce and
communication, many of which are not anticipated by our precedents” might require rethinking
the present law, such “serious commercial consequences . . . are totally absent in this case.” Id.
at 2791-93.
At the same time, Justice Breyer rejected the New Jersey Supreme Court’s approach
under which a producer “would be subject to jurisdiction for a products-liability action so long as
it ‘knows or reasonably should know that its products are distributed through a nationwide
distribution system that might lead to those products being sold in any of the fifty states.’” Id. at
2793 (original emphasis). Justice Breyer was concerned that the lower court’s broad approach
could impose jurisdiction on “any domestic manufacturer who sells its products . . . to a national
distributor, no matter how large or small the manufacturer, no matter how distant the forum, and
no matter how few the number of items that end up in the particular forum.” Id. He rejected that
approach as “rest[ing] jurisdiction . . . upon no more than the occurrence of a product-based
accident in the forum State.” Id.

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This Court finds that Justice Breyer’s concurrence, joined by Justice Alito, is what
controls here. See Marks v. United States, 430 U.S. 188, 193 (1977) (“When a fragmented Court
decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the
holding of the Court may be viewed as that position taken by those Members who concurred in
the judgments on the narrowest grounds . . . .’”) (quoting Gregg v. Georgia, 428 U.S. 153, 169
n.15 (1976)). Accord Ainsworth v. Moffett Engineering, Ltd., 716 F.3d 174, 178 (5th Cir. 2013)
(finding that in McIntyre, Justice Breyer’s concurrence controls); AFTG-TG, LLC v. Nuvoton
Tech. Corp., 689 F.3d 1358, 1363 (Fed. Cir. 2012); Windsor v. Spinner Indus. Co., Ltd., 825 F.
Supp. 2d 632, 637-38 (D. Md. 2011).
The Court holds that, under appropriate fact patterns, a forum state may exercise personal
jurisdiction over an out-of-state manufacturer4 of products that are sold in the forum state by
third party distributors.
BBB asserts that it sold 1,992 bottles of fuel gel either manufactured or bottled by
Losorea in Maryland by BBB. BBB Second Supplemental Br. in Opp. Ex. 30 (Paper No. 98)
(showing 763 bottles sold of “gel fuel” and 1,229 bottles sold of “citro gel” in 17 different cities
in Maryland). While Losorea argues that BBB has provided no documentation relating to these
sales and cannot substantiate the accuracy of those figures, Losorea, for its part, has provided the
Court no documentation undermining BBB’s assertions, and there is nothing in the record that
suggests that the fuel gel purchased by the Stephens was a “single isolated sale,” McIntyre, 131
S. Ct. at 2792 (J. Brennan).5 See also Ainsworth, 716 F.3d at 179 (finding personal jurisdiction

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The Court does not find, one way or another, that Losorea’s involvement with the fuel gel “meets the definition of
manufacturing in Maryland” as is alleged by BBB. BBB Supplemental Br. in Opp. 18 (Paper No. 58) (citing the
Code of Maryland Regulations (“COMAR”), 18.03.05.02(B)(2)(a) (2013)). Any such reference to Losorea as a
“manufacturer” is for ease of reference.
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Restoration Hardware, a nationwide chain, also sold the fuel gel and “Firelights” product, but it is unknown how
many bottles of fuel gel—if any—were sold by Restoration Hardware in Maryland.

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over non-resident defendant who sold 203 forklifts—through a distributor—to customers in
Mississippi, consisting of approximately 1.55% of defendant’s sales during that period).
This is not a case in which it was merely foreseeable to Losorea that the fuel gel might
wind up in Maryland. For jurisdictional purposes at least, the Court finds that Losorea knew that
the fuel gel would ultimately be distributed by BBB, a national retailer. Losorea packaged and
labeled bottles of fuel gel with BBB’s price tag on them. See BBB Second Supplemental Br. in
Opp. (Paper No. 98) at Ex. 9 (picture of the fuel gel with BBB sticker affixed); Ex. 12 (Fragnoli
Dep. 22:13-23:1, 47:5-48:8) (Losorea’s owner admitted that BBB stickers were affixed to fuel
gel when Losorea applied the Fire Gel label); Ex. 6 (Hammond Dep. 232:19-233:13) (Losorea’s
owner received an e-mail stating that Napa was selling the fuel gel to BBB and the labels will
have to be modified accordingly); Ex. 25 (e-mail to Ryan Dailey, Losorea employee and current
CyCan Industries President, requesting a shipment be prepared for BBB). Losorea concedes that
it affixed labels containing BBB’s name on the bottles of fuel gel, and while it argues that this
knowledge at most shows that it was foreseeable to it that the product would be sold to
customers in Maryland, as opposed to showing a targeting of the forum, Tr. 24:14-20, 25:4-16,
Apr. 17, 2014 (Paper No. 72), the Court disagrees.
Losorea misapprehends the thrust of McIntyre. The present case is not one in which a
lone item or just a few items happened to wind up in this state. Instead, this case folds into the
scenario portrayed by Justice Breyer, where a defendant, “instead of shipping the products
directly, . . . consigns the product through an intermediary . . . who then receives and fulfills the
orders.” McIntyre, 131 S. Ct. at 2793.
Not only is this case distinguishable from McIntyre; it is in harmony with the only case
from this District that has considered personal jurisdiction in the “stream of commerce” context

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post-McIntyre, Windsor v. Spinner Indus. Co., Ltd., 825 F. Supp. 2d 632 (D. Md. 2011). In
Windsor, Judge Bredar found that jurisdiction did not lie over a Taiwanese manufacturer where
the court had “no details about the particular chain of distribution that brought the allegedly
defective” product to the Maryland store where it was purchased by plaintiffs, and where the
third party distributors and manufacturers had “no connection whatever to this case.” Id. at 639.
In contrast to the foreign manufacturer in Windsor, in this case Losorea relied on a clearly
defined network of distributors for the ultimate sale of the fuel gel in Maryland, and in doing so
“invoke[ed] the benefits and protections of the laws of the state.” Lesnick, 35 F.3d at 946. BBB,
in sum, has shown that Losorea had an ongoing and intentional commercial relationship with
Fuel Barons, and through Fuel Barons, with Napa and BBB. At a minimum, Losorea bottled and
packaged the fuel gel knowing that BBB would sell the fuel gel in its stores, and BBB in fact
sold 1,992 bottles of fuel gel in Maryland. “From these ongoing relationships, it can be
presumed that the distribution channel formed by [Losorea, BBB and others] was intentionally
established, and that defendant[] knew, or reasonably could have foreseen, that a termination
point of the channel was [Maryland].” Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d
1558, 1564 (Fed. Cir. 1994); AFTG-TG, LLC, 689 F.3d at 1363, 1365 (adhering to Beverly Hills
Fan precedent post-McIntyre). Losorea cannot disavow the clearly defined chain of distribution
it established in this state in order to avoid having to be haled into court here.
The Court finds that it has specific jurisdiction over Losorea.
The Court wishes to make clear, however, that it is only finding specific, not general
jurisdiction over Losorea. BBB argues that general jurisdiction should be found because Losorea
maintained a website that advertised its products as being found “worldwide” (although no direct
sales were made through its website), including listing products which are VOC (Volatile

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Organic Compounds) compliant and may be sold in Maryland. BBB also argues that Losorea
generated over $71,000 in revenue from the sale of its products to persons or entities in
Maryland—Losorea claims it was only $62,426.17—and purchased $13,926.00 worth of goods
from Maryland. The Court declines to find that these facts demonstrate the sort of “continuous
and systematic” contacts with Maryland that would justify an assertion of general jurisdiction
over Losorea.
IV.
Losorea also argues that the cross-claim filed against it by BBB should be dismissed
pursuant to Fed. R. Civ. P. 12(b)(6) because the cross-claim is identical to the claim in BBB’s
Third-Party Complaint. Losorea’s lone citation in support of this argument comes from the U.S.
District Court, Southern District of New York, which dismissed one of two duplicative claims
contained within the same complaint. See Aramony v. United Way of Am., 949 F. Supp. 1080,
1084 (S.D.N.Y. 1996). But Losorea has cited no case in which a cross-claim was dismissed as
duplicative of a third party complaint. The Court holds that BBB may pursue a cross-claim
against Losorea under Fed. R. Civ. P. 13(g). Losorea will suffer no hardship in defending the
claims asserted against it which, by its own admission, involve identical legal theories arising out
of identical facts.
V.
For the foregoing reasons, the Court DENIES Defendant Losorea Packaging, Inc.’s
Corrected Motion to Dismiss for Lack of Personal Jurisdiction (Paper No. 33), DENIES
Defendant/Third-Party Defendant Losorea Packaging, Inc.’s Motion to Dismiss Second
Amended Complaint Filed by Plaintiffs for Lack of Personal Jurisdiction (Paper No. 92), and

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DENIES Defendant/Third-Party Defendant/Cross-Claim Defendant Losorea Packaging, Inc.’s
Motion to Dismiss Cross-Claims (Paper No. 99).
A separate Order will ISSUE.

/s/
_
PETER J. MESSITTE
UNITED STATES DISTRICT JUDGE

September 22, 2014

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