Global Lift Corp. v. Hiwin Corporation et al

Filing 57

ORDER Denying 51 Motion to Transfer and Denying 50 Motion to Dismiss Foreign Defendants for Lack of Personal Jurisdiction. Signed by District Judge Thomas L. Ludington. (Sian, M)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
GLOBAL LIFT CORP.,
Plaintiff,

Case No. 14-cv-12200

v

Honorable Thomas L. Ludington

HIWIN CORPORATION, et al.,
Defendants.
__________________________________________/
ORDER DENYING MOTION TO TRANSFER AND DENYING MOTION TO DISMISS
FOREIGN DEFENDANTS FOR LACK OF PERSONAL JURISDICTION
On June 4, 2014, Plaintiff Global Lift Corporation filed a complaint against Defendants,
alleging breach of contract, negligent design, and breach of implied warranty. Compl. ¶ 1, ECF
No. 1. Global Lift, a supplier of ADA-compliant poolside lifts, alleges that it entered into a
series of transactions with Defendants in which Global Lift “submitted various Purchase Orders
to Defendants for the design, manufacture, and delivery of specially manufactured actuators,
control boxes, batteries, battery packs, handheld switches and related components.” Global Lift
further alleges that the actuator systems were to be manufactured in Taiwan by Defendants
Hiwin Technologies and Hiwin Mikrosystems (together the “Taiwanese Defendants”), shipped
to Hiwin Corporation in Illinois, and then shipped to Global Lift in Michigan.
The Taiwanese Defendants now move for dismissal based on a lack of personal
jurisdiction, and all Defendants move to transfer the case to the Northern District of Illinois. See
Mot. to Transfer II, ECF No. 51; Mot. to Dismiss, ECF No. 50. Both motions will be denied.
I.

Global Lift is a Michigan corporation with its principal place of business in Bad Axe,
Michigan. Compl. ¶ 3. Global Lift supplies ADA-compliant poolside lifts for public swimming
pools and spas in the United States. Id. at ¶ 2.
Defendant Hiwin Corporation, is an Illinois corporation with its principal place of
business in Elgin, Illinois. Id. at ¶ 5. Hiwin Corporation manufactures, services, and repairs
actuator systems, which are one of the main components of Global Lift’s pool and spa lifts. Id. at
¶ 4. Defendant Hiwin Corporation is owned by Defendant Hiwin Technologies Corporation, a
Taiwanese corporation with no place of business in the United States. Defendant Hiwin
Technologies Corporation also owns Defendant Hiwin Mikrosystems Corporation, a Taiwanese
corporation that manufactures actuator systems.1
A.
After engaging in email negotiations, on February 20, 2012 Global Lift prepared two
purchase orders for actuator systems from Defendant Hiwin Corporation. See Compl. Ex. A..
The purchase orders contain material terms including quantity, pricing, delivery schedule, and a
signature from Global Lift’s CEO. Id. Pursuant to the Purchase Orders, Global Lift was to pay
over $2 million to Hiwin Corporation for nearly 5,000 specially manufactured actuator systems
that were allegedly designed and manufactured by the Taiwanese Defendants. Id. at ¶¶ 17-20.
Defendant Hiwin Corporation agreed to the first two purchase orders on February 22, 2012
through Sales Order Acknowledgements, which provided that the actuators would be shipped to
FOB Elgin. Id. at ¶ 17; Joe Jou Aff., ECF No. 50 Ex. A-4.
On March 16, 2012 the President of Hiwin Corporation, Joe Jou, traveled to Bad Axe,
Michigan where the parties executed a confidentiality agreement. ECF No. 52. Ex. 5. Global Lift

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Plaintiff alleges that “Defendant Hiwin Technologies Corp. is the owner of [Hiwin Mikrosystems] and/or Hiwin
Corp.”. Compl. ¶ 8.

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also prepared a third purchase order on that date. See Id. at Ex. B. Defendants contend that
Hiwin Corporation eventually accepted the third purchase order by issuing a Sales Order
Acknowledgment via email from Elgin, Illinois, but Defendants have not provided the Court
with the third Sales Order Acknowledgment. See Joe Jou Aff. ¶ 15.
On March 26, 2012 the first units were delivered to Global Lift Corporation’s location in
Pigeon, Michigan. Id. at Ex. 6. Global Lift began incorporating the actuator systems into their
swimming pool and spa lifts, which were installed across the United States. Compl. ¶ 21. By
April of 2014 Global Lift discovered that the actuators had an unacceptably high failure rate. Id.
at ¶¶ 22-23. Global Lift notified Defendants of the high failure rate, but Defendants did not
address the causes of the product failure or replace the defective actuators. Id. at ¶ 23. Global Lift
then refused to take delivery of the remaining actuator systems. Those systems remain at
Defendant Hiwin’s warehouse in Elgin, Illinois.
B.
Global Lift filed suit against the three Defendant corporations on June 4, 2014. See
Compl., ECF No. 1. On July 17, 2014, the Taiwanese Defendants filed a motion to quash service
of process. The motion was granted because Global Lift did not serve the Taiwanese Defendants
in a method prescribed by the Federal Rules of Civil Procedure. Global Lift was then provided
multiple extensions in which to effect service and obtain proof of service.
Plaintiff filed certificates of service on December 18, 2015. ECF No. 38. The certificates
represent that Global Lift served Defendants on March 2, 2015, and that Defendants’ answers
were due on March 23, 2015. Id. After no answers were filed, Plaintiff moved for a default
judgement against all Defendants. ECF Nos. 43, 44.

The parties then stipulated to the

withdrawal of Plaintiff’s motion for default and for an extension for Defendants to file

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responsive pleadings. See ECF No. 49. On April 15, 2016, the Taiwanese Defendants moved for
dismissal based on a lack of personal jurisdiction, and all Defendants moved to transfer the case
to the Northern District of Illinois. Both motions are now ready for decision.
II.
Defendants’ motion to transfer will be addressed first. Venue is proper in the judicial
district where either all defendants reside or where the claim arose. Al-Muhaymin v. Jones, 895
F. 2d 1147, 1148 (6th Cir. 1990); 28 U.S.C. § 1391(b). Defendants concede that the Eastern
District of Michigan is a proper venue, but argue that the case should be transferred to the
Northern District of Illinois under 28 U.S.C. § 1404(a). Plaintiff concedes that the Northern
District of Illinois would be a proper venue, but argues that the case should remain in the Eastern
District of Michigan.
Under § 1404(a), “[f]or the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any other district or division where the
action might have been brought.” 28 U.S.C. § 1404(a). The factors that guide a district court’s
discretion in deciding whether to transfer a case include: (1) the convenience of the witnesses;
(2) the location of relevant documents and the relative ease of access to sources of proof; (3) the
convenience of the parties; (4) the locus of the operative facts; (5) the availability of process to
compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) the
forum’s familiarity with governing law; (8) the weight accorded the plaintiff’s choice of forum;
and (9) trial efficiency and interests of justice, based upon the totality of the circumstances.
Overland, Inc. v. Taylor, 79 F. Supp. 2d 809, 811 (E.D. Mich. 2000). Absent a forum selection
clause between the parties, the party bringing the motion to transfer venue bears the burden of
proving that the transferee district is a more convenient forum. See Viron Int’l Corp. v. David

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Boland, Inc., 237 F. Supp. 2d 812, 815 (W.D. Mich. 2002). Furthermore, the plaintiff’s choice
of forum must be afforded substantial deference. See Audi AG & Volkswagon of Am., Inc. v.
D’Amato, 341 F. Supp. 2d 734, 750 (E.D. Mich. 2004).
A.
There is no forum selection clause between the parties, and Plaintiff’s choice of forum in
the Eastern District of Michigan must be afforded substantial deference. Defendants have not
shown that it would be less convenient for them and their witnesses to travel to Bay City,
Michigan than it would be for Plaintiff and its witnesses to travel to Chicago, Illinois. Similarly,
Defendants have not demonstrated that ease of accessing documents or burdens of proof would
be significantly greater in the Northern District of Illinois. Defendants also have not addressed
any issues regarding the process to compel unwilling witnesses.
The location of the “locus of operative facts” is in dispute. The parties agree that the
contract negotiations took place in both Michigan and Illinois, primarily through email. See
Mot. to Transfer II 4, ECF No. 51. Plaintiff places emphasis on the fact that the parties signed a
confidentiality agreement in Michigan, and that the actuator systems were designed in Michigan
and Taiwan.

Defendants emphasize that the agreements were finalized in Illinois and the

actuator systems were delivered in Illinois. All things considered, this factor is evenly weighed
for both the Plaintiff and the Defendants.
The parties also dispute the applicable governing state law. Noting a conflict between
Michigan law and Illinois law with regard to Plaintiff’s implied warranty claim, Defendants
argue that Illinois law should supply the rule of decision. Plaintiff contends that Michigan law
should supply the rule of decision. Under § 188 of the Restatement (Second) of Conflicts, as
adopted by the Michigan Courts, the rights and duties of parties to a contract is determined by

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the law of the state that has “the most significant relationship to the transaction and the
parties….”. Restatement (Second) of Conflicts § 188(1). The following factors are relevant in
determining the applicable law: (1) the place of contracting; (2) the place of negotiating the
contract; (3) the place of performance; (4) the location of the subject matter of the contract; and
(5) the domicile, residence, nationality, place of incorporation, and place of business of the
parties. § 188(2). The second factor is not dispositive, as the parties agree that the negotiations
took place via email in both Illinois and Michigan. Nor is the fifth factor, which weighs equally
in favor of both Illinois and Michigan law.
The first disputed conflict factor – the place of contracting – turns on where the sales
agreements were finalized. See C.E. Hale, Corp. v. Butler Polymet, Inc., 869 F.2d 1489 (6th Cir.
1989) (“Under Michigan law, contract interpretation is controlled by the laws of the place where
the last act necessary to make it a binding contract took place.”). Plaintiff argues that the sales
agreements were finalized on March 16, 2012 in Bad Axe, Michigan, at which time the parties
orally agreed to an extension of credit and executed a confidentiality agreement, and Plaintiff
issued a third purchase order for 10,000 units. Defendants argue that the agreements were
finalized after Joe Jou’s visit, when Hiwin Corporation issued the last of its three Sales Order
Acknowledgments from Elgin, Illinois. As noted above Defendants have not furnished the Court
with the purported third Sales Order Acknowledgment, but Plaintiff appears to concede that all
Sales Order Acknowledgments were issued from Defendant Hiwin Corporation’s place of
business in Elgin, Illinois. See Resp. to Mot. to Transfer 9, 11, ECF No. 52. Because the relevant
sales agreements were not finalized until Defendant Hiwin Corporation issued its Sales Order
Acknowledgments, Defendants are correct that the place of contracting turns on the location of

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the acknowledgments. Plaintiff does not dispute that the acknowledgments were issued from
Elgin, Illinois. Accordingly, the place of contracting was Elgin, Illinois.
The third factor – the place of performance – also weighs in favor of Illinois. As set forth
in the Sales Order Acknowledgments, the contracts were executed FOB Elgin, Illinois. The
actuator systems were therefore delivered to Plaintiff Global Lift in Elgin, Illinois.
Finally, the location of the subject matter of the contract weighs in favor of Illinois.
While a number of the actuator systems were delivered to Plaintiff and installed in pools across
the county, the majority of the systems remain in Hiwin Corporation’s warehouse in Elgin,
Illinois.
Based on the evidence presented at this time, it appears that Illinois law will supply the
rule of decision for any conflicts of law.
B.
In summary, the majority of the § 1404(a) factors are neutral. While consideration of the
locus of the operative facts and the governing law weighs in favor of Illinois, a consideration of
Plaintiff’s choice of forum weighs in favor of Michigan. Also weighing in favor of maintaining
theEastern District of Michigan forum is the fact that Defendants bear the burden of proving that
the transferee district is a more convenient forum. See Viron Int’l Corp, 237 F. Supp. 2d at 815.
While Defendants have demonstrated that the Northern District of Illinois would be an
appropriate venue, Defendants have not demonstrated that the Northern District of Illinois is a
more convenient forum. Defendant’s motion to transfer will therefore be denied.
III.
The Taiwanese Defendants argue that Global Lifts’ claims against them should be
dismissed because this Court does not have personal jurisdiction over them. A plaintiff bears the

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burden of establishing personal jurisdiction. See Brunner v. Hampson, 441 F.3d 457, 462 (6th
Cir. 2006). “[I]n the face of a properly supported motion for dismissal, the plaintiff may not
stand on his pleading but must, by affidavit or otherwise, set forth specific facts showing that the
court has jurisdiction.” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 449 (6th Cir. 2012)
(quoting Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)).
“Presented with a properly supported 12(b)(2) motion and opposition, the court has three
procedural alternatives: it may decide the motion upon the affidavits alone; it may permit
discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any
apparent factual questions.” Theunissen, 935 F.2d at 1458.

When a district court does not

conduct an evidentiary hearing, but instead rules solely on written submissions, the plaintiff’s
burden is relatively slight: the plaintiff “must make only a prima facie showing that personal
jurisdiction exists in order to defeat dismissal.” Estate of Thomson ex rel. Estate of Rakestraw v.
Toyota Motor Corp. Worldwide, 545 F.3d 367, 360 (6th Cir. 2008) (quoting Theunissen v.
Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). In such a case, a court “will not consider facts
proffered by the defendant that conflict with those offered by the plaintiff, and will construe the
facts in a light most favorable to the nonmoving party.” Indah v. U.S. S.E.C., 661 F.3d 914, 920
(6th Cir. 2011) (internal quotations and citation omitted); See also Air Prods. & Controls, Inc. v.
Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007). “Because weighing any controverted
facts is inappropriate at this stage, dismissal is proper only if [the plaintiff’s] alleged facts
collectively fail to state a prima facie case for jurisdiction.” Carrier Corp. 673 F.3d at 449
(internal quotations and citation omitted).
A.

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Plaintiff Global Lift first argues that the Taiwanese Defendants have waived their rights
to challenge personal jurisdiction by failing to raise personal jurisdiction in their previously filed
motion to dismiss or transfer, ECF No. 13. “[B]ecause the requirement of personal jurisdiction
flows from the Due Process Clause and protects an individual liberty interest, an individual may
submit to the jurisdiction of the court by appearance.” Gerber v. Riordan, 649 F.3d 514, 518 (6th
Cir. 2011) (quoting Days Inns Worldwide, Inc. v. Patel, 445 F.ed 899, 905 (6th Cir. 2006) and
Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703, (1982). By
submitting to jurisdiction, a defendant waives any potential personal jurisdiction defense.
Gerber, 649 F.3d at 518. “The requirement that a court have personal jurisdiction is a due
process right that may be waived either explicitly or implicitly. The actions of the defendant may
amount to a legal submission to the jurisdiction of the court.” Days Inns, 445 F.3d at 905.
“A fundamental tenet of the Federal Rules of Civil Procedure is that certain defenses
under Fed. R. Civ. P. 12 must be raised at the first available opportunity or, if they are not, they
are forever waived.” See Am. Ass’n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104,
1106 (9th Cir. 2000). Federal Rules of Civil Procedure 12(h)(a) and 12(g)(2) together hold that a
party waives its right to challenge personal jurisdiction by omitting it from another motion filed
pursuant to Rule 12(b) if the personal jurisdiction defense was available at the time of its earlier
motion.
B.
Plaintiff argues that, by failing to raise a 12(b)(2) defense in their previously filed motion
to dismiss or transfer, ECF No. 13, Defendants waived their right to challenge personal
jurisdiction under Rules 12(h)(a) and 12(g)(2). On July 17, 2015, the Taiwanese Defendants filed
a motion to quash for insufficient service of process under Rule 12(b)(5) and a motion to dismiss

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for improper venue pursuant to Rule 12(b)(3). The Taiwanese Defendants did not raise a defense
of lack of personal jurisdiction in either of those motions, but stated in a footnote that they were
preserving their right to do so in the future. Such a footnote is insufficient to overcome the
specific dictates of the Federal Rules of Civil Procedure. Under Rule 12(h), by raising any Rule
12 defenses in their first filings, the Taiwanese Defendants were obliged to raise all such
defenses in those filings.
Had the Taiwanese Defendants properly raised their personal jurisdiction defense in their
original filings, a ruling in their favor could have saved the Court and Plaintiff Global Lift over a
year’s worth of time and expense invested in serving the Taiwanese Defendants and obtaining
certificates of service. Because the Taiwanese Defendants did not raise a personal jurisdiction
defense at that time, the Taiwanese Defendants submitted to this Court’s personal jurisdiction.
The Taiwanese Defendants have therefore waived their ability to challenge personal jurisdiction,
and the merits of the personal jurisdiction defense will not be addressed.
IV.
Accordingly, it is ORDERED that Defendant’s Motion to Transfer, ECF No. 51, is
DENIED.
It is further ORDERED that the Taiwanese Defendants’ motion to dismiss for lack of
personal jurisdiction, ECF No. 50, is DENIED.

s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
Dated: June 22, 2016

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PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on June 22, 2016.
s/Michael A. Sian
MICHAEL A. SIAN, Case Manager

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