Pacific Indemnity Company v. M. Holland and Sons Construction, Inc et al

Filing 74

Judge Rya W. Zobel: Memorandum of Decision entered granting 52 Motion to Dismiss for Lack of Jurisdiction (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 12-11844-RWZ

PACIFIC INDEMNITY COMPAN
as subrogee of David Jankilevitch
and
AFFILIATED FM INSURANCE COMPANY
as subrogee of Millennium Place Primary Condominium Association
v.
NEDI CONSTRUCTION LLC
and
UNITED RENTALS (NORTH AMERICA), INC.
v.
ANTHONY RICH, SPOT COOLERS, INC.
and
SCHAEFER VENTILATION EQUIPMENT, LLC

MEMORANDUM OF DECISION
February 7, 2014
ZOBEL, D.J.
This case arises out of a fire allegedly caused by an evaporative cooler. The
manufacturer of the cooler, defendant/third-party defendant Schaefer Ventilation
Equipment, LLC (“Schaefer”)1, moves pursuant to Federal Rule of Civil Procedure
12(b)(2) to dismiss for lack of personal jurisdiction. Upon consideration of the parties’
written and oral arguments and evidentiary submissions, the motion (Docket # 52) is
ALLOWED.
1

Schaefer is misnamed “Schaefer Ventilation Equipment, Inc.” in the caption.

I. Background
A. The Fire and the Cooler
David Jankilevitch (“Jankilevitch”) owns a unit in a condominium building owned
and operated by Millennium Place Primary Condominium Association (“Millennium
Place”). In 2011, Jankilevitch hired NEDI Construction LLC (“NEDI”) to perform
remodeling work in his unit. On or about March 18, 2011, NEDI allegedly left an
evaporative cooler running unattended in the condo unit, resulting in a fire that caused
damage to the property.
The evaporative cooler in question was manufactured by Schaefer in Minnesota.
Schaefer sold the cooler to Carrier Rentals, Inc. d/b/a Spot Coolers, Inc. (“Spot
Coolers”),2 and shipped it to Spot Coolers’ Chicago, Illinois, location. Spot Coolers
subsequently sold and shipped the cooler to United Rentals (North America), Inc.
(“United Rentals”), in Shrewsbury, Massachusetts. NEDI thereafter rented the cooler
from United Rentals for use on the condo project.
B. Schaefer
Schaefer is a limited liability company incorporated in Minnesota with a principal
place of business in Sauk Rapids, Minnesota. According to an affidavit from its
president, Schaefer has never had employees working in Massachusetts; has never
owned real property in Massachusetts, has never maintained an office, facility, mailing
address or telephone number in Massachusetts; has never had bank accounts in
Massachusetts; has never advertised in Massachusetts or directly to Massachusetts
2

Spot Coolers is misnamed “Spot Coolers, Inc.” in the caption.

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residents; and has never registered to transact business in Massachusetts. Docket #
54, Ex. 1.
Schaefer does, however, sell products in Minnesota that are shipped to
independent non-exclusive dealers located in Massachusetts for presumptive resale to
Massachusetts residents. During the years prior to and immediately following the
March 2011 fire, sales to independent non-exclusive Massachusetts dealers accounted
for 0.83% of Schaefer’s nationwide annual sales in 2007; 1.63% in 2008; 1.72% in
2009; 1.08% in 2010; 0.35% in 2011; and 0.47% in 2012, totaling for all these years
approximately $640,000. Docket # 54, Ex. 4.
Schaefer operates a website that provides information about its various products
and indicates that the company “sells through a national and international network of
dealers and distributors.” Docket # 58, Ex. 1. The website, which is accessible by
Massachusetts residents, invites visitors to contact a local dealer for product selection
assistance or, alternatively, to contact Schaefer directly via email, telephone, fax, or an
online request form for more information. Docket # 63, Exs. 1-2.
C. Procedural History
Pacific Indemnity Company (“Pacific”) as subrogee of Jankilevitch brought this
suit against NEDI and United Rentals alleging negligence and breach of implied
warranty. United Rentals cross-claimed against NEDI for indemnity and filed a thirdparty complaint against Anthony Rich, an employee of NEDI, for contribution and
indemnity and against Spot Coolers and Schaefer for contribution and breach of
warranty. After being permitted to intervene in the action, Affiliated FM Insurance
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Company (“Affiliated FM”) as subrogee of Millennium Place filed, inter alia, claims
against Schaefer for negligence, breach of implied warranties of merchantability and of
fitness for a particular purpose, and unfair and deceptive acts and practices in violation
of Mass. Gen. Laws ch. 93A.3
Schaefer now seeks dismissal of all claims against it for want of personal
jurisdiction. United Rentals and Affiliated FM oppose Schaefer’s motion.
II. Legal Standard
Plaintiffs bear the burden of demonstrating that the court has personal
jurisdiction over a defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole,
P.A., 290 F.3d 42, 50 (1st Cir. 2002). While there are several methods for determining
whether a plaintiff has met that burden, the “most conventional” is the “prima facie”
standard, id., under which the court considers “only whether the plaintiff has proffered
evidence that, if credited, is enough to support findings of all facts essential to personal
jurisdiction,” Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992). The
plaintiff’s facts are taken “as true (whether or not disputed) and construe[d] . . . in the
light most congenial to the plaintiff’s jurisdictional claim.” Mass. Sch. of Law at
Andover, Inc. v. Am. Bar Ass’n, 142 F.3d 26, 34 (1st Cir. 1998). The court then “add[s]
to the mix facts put forward by the defendant[], to the extent they are uncontradicted.”

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Additional claims, cross-claims, and counterclaims among the parties abound: NEDI and Rich,
represented by same counsel, both cross-claimed against United Rentals for contribution and indemnity
(Docket # 29). Affiliated FM brought claims against United Rentals and Spot Coolers for negligence,
breach of implied warranties of merchantability and of fitness for a particular purpose, and violation of
Mass. Gen. Laws ch. 93A, as well as a negligence claim against NEDI (Docket # 46). Spot Coolers filed
a counterclaim for contribution against United Rentals and cross-claims for contribution against NEDI,
United Rentals, Rich, and Schaefer (Docket ## 32 and 61).

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Id. Since the jurisdictional dispute here does not involve conflicting or contradictory
evidence, I will apply the prima facie standard. See Boit, 967 F.2d at 675-78
(discussing use of prima facie, preponderance-of-the-evidence, and likelihood
standards); Fiske v. Sandvik Mining, 540 F. Supp. 2d 250, 254 (D. Mass. 2008) (“The
prima facie method is appropriate here because the jurisdictional inquiry does not
involve materially conflicting versions of the relevant facts.”).
Personal jurisdiction must be authorized by state statute and must comply with
the Due Process Clause of the federal Constitution. Adelson v. Hananel, 652 F.3d 75,
80 (1st Cir. 2011). The Massachusetts Supreme Judicial Court has interpreted the
state's long-arm statute, Mass. Gen. Laws ch. 223A, § 3, to grant personal jurisdiction
to the full extent permitted by the Due Process Clause. Therefore, I need only consider
whether personal jurisdiction here satisfies due process. Id. at 80–81; Daynard, 290
F.3d at 52.
Personal jurisdiction over an out-of-state defendant can be either specific or
general. For specific jurisdiction, the defendant must have sufficient “minimum
contacts” with the forum state, and a plaintiff’s claim must be related to those contacts.
Harlow v. Children's Hosp., 432 F.3d 50, 57 (1st Cir. 2005). For general jurisdiction,
the defendant must have “continuous and systematic contacts” with the forum state,
though the cause of action need not be related to those contacts. Id. For either type of
jurisdiction, the defendant's contacts must represent a purposeful availment of the
privilege of conducting activity in the forum state, and the exercise of jurisdiction must
be reasonable under the circumstances. Id.
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III. Discussion
United Rentals and Affiliated FM do not specify whether they are advocating for
the exercise of specific or general personal jurisdiction over Schaefer and make
arguments that are conceivably relevant to both. Their efforts fail under both analyses.
A. Specific Jurisdiction
It is clear that Schaefer has had some contacts with Massachusetts through the
sale and shipping of products to independent non-exclusive dealers in the state.4
United Rentals and Affiliated FM also assert that Schaefer’s website creates minimum
contacts with Massachusetts by inviting contact by state residents and businesses.
However, United Rentals and Affiliated FM have not shown that their claims against
Schaefer “either arise[] directly out of, or [are] related to” such contacts. Harlow, 432
F.3d at 61. “The relatedness requirement is not an open door; it is closely read, and it
requires a showing of a material connection.” Id. Here, United Rentals’ or Affiliated
FM’s claims pertain to an evaporative cooler which was not directly sold and shipped
from Schaefer to a Massachusetts dealer, but rather ended up in the state (and at the
condo remodeling site) at the hands of other independent entities, outside of
Schaefer’s direction or control. See supra n.4. There is also no allegation or evidence
that United Rentals’ and Affiliated FM’s claims against Schaefer, as well as the cooler

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Citing Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H & Co., 295
F.3d 59, 64 n.3 (1st Cir. 2002), Schaefer asserts that sales to independent non-exclusive dealers “do not
count” as contacts of a manufacturer for the purposes of assessing personal jurisdiction. Schaefer
misreads the relevant provision of Cambridge, which notes that “sales by an independent distributor . . .
or separately incorporated subsidiary normally do not count as ‘contacts’ of the manufacturer or parent
corporation.” Id. Thus, while the sale of the evaporative cooler by Spot Coolers to United Rentals and
its rental by NEDI in Massachusetts do not count in evaluating Schaefer’s contacts, Schaefer’s own direct
sales to Massachusetts dealers do.

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at issue, are in any way connected to the company’s website activities. Schaefer’s
contacts with Massachusetts simply do not form an “important or [at least] material,
element of proof” in United Rentals’ and Affiliated FM’s case. United Elec., Radio and
Mach. Workers of America v. 163 Pleasant Street Corp., 960 F.2d 1080, 1089 (1st Cir.
1992).
The inquiry need go no further. Because United Rentals and Affiliated FM have
not demonstrated a sufficient connection between their claims and Schaefer’s contacts
with Massachusetts, the court does not have specific jurisdiction over Schaefer.
B. General Jurisdiction
Schaefer’s contacts with Massachusetts are also insufficient to warrant the
exercise of general jurisdiction. The test for evaluating contacts for general jurisdiction
“is considerably more stringent than that applied to specific jurisdiction questions.”
United States v. Swiss American Bank, Ltd., 274 F.3d 610, 619 (1st Cir. 2001) (quoting
Noonan v. Winston Co., 135 F.3d 85, 93 (1st Cir. 1988)). Schaefer is a Minnesota
corporation with its principal place of business in Minnesota and no offices, employees,
or accounts in Massachusetts. It is not registered to transact business in this state and
does not advertise here. While Schaefer does conduct a measure of business in
Massachusetts through its sales to independent non-exclusive dealers, the volume of
that business is small, less than 2% (and in some years, less than 1%) of its total
nationwide annual sales. Such limited sales do not constitute “continuous and
systematic” business dealings with Massachusetts given the general lack of other
contacts. See, e.g., Cossaboon v. Maine Medical Center, 600 F.3d 25, 31 (1st Cir.
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2010) (no general jurisdiction in New Hampshire even where hospital advertised to
state residents, was registered to do business in state and had one state-based
employee, derived 3.24% percent of total revenue from in-state residents, and treated a
substantial number of state residents); Newman v. European Aeronautic Defence and
Space Company Eads N.V., 700 F. Supp. 2d 156, 168 (D. Mass. 2010) (no general
personal jurisdiction where defendants were not registered to do business in
Massachusetts, had no Massachusetts-based employees, and derived only 1.36% of
total revenue from Massachusetts customers).
Schaefer’s only other relevant contact with Massachusetts is arguably through
its website, but “[t]he mere existence of a website that is visible in a forum and that
gives information about a company and its products is not enough, by itself, to subject a
defendant to personal jurisdiction in that forum.” Cossaboon, 600 F.3d at 35 (quoting
McBee v Delica Co., 417 F.3d 107, 124 (1st Cir. 2005)). Schaefer’s website is largely
informational, providing details about the various products it makes and sells. Although
there are some interactive features – namely links that permit users to contact Schaefer
for more information – the website does not sell products or render services online, nor
does it target Massachusetts residents in particular. See Cossaboon, 600 F.3d at 35
(finding that the presence of interactive features is not dispositive; rather, “courts have
focused on the extent to which the defendant has actually and purposefully conducted
commercial or other transactions with forum state residents through its website.”); id.
(finding hospital website did not support personal jurisdiction despite features
permitting users to make online donations, complete patient pre-registration, register
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for classes, find a doctor, and apply for employment). The website does not establish
general personal jurisdiction over Schaefer.
IV. Conclusion
Schaefer’s motion to dismiss (Docket # 52) is ALLOWED.
February 7, 2014
DATE

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

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