Emerson Electric Co. v. Suzhou Cleva Electric Applicance Co., Ltd. et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Emerson's motion to strike the declarations of Hong Chen (Doc. 134) is GRANTED. IT IS FURTHER ORDERED that Suzhou Cleva Electric Appliance Co., Ltd. and Cleva Hong Kong Limited's renewed mot ion to dismiss for lack of personal jurisdiction (Doc. 131) is DENIED. IT IS FURTHER ORDERED that Emerson's motion to amend the case management order (Doc. 120) is GRANTED. IT IS FURTHER ORDERED that the parties shall meet and confer and then s ubmit a joint proposed amended case management order within fourteen (14) days of the date of this Memorandum and Order. IT IS FURTHER ORDERED that a scheduling conference is set for July 21, 2014, at 12:30 p.m, in the chambers of the undersigned, 1 3-South. At the scheduling conference, counsel will be expected to discuss the deadlines and trial date set forth in the joint proposed case management order. After the scheduling conference, the court will issue an amended casemanagement order.. Signed by Magistrate Judge Shirley P. Mensah on 7/1/14. (LGK)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EMERSON ELECTRIC CO.,
SUZHOU CLEVA ELECTRIC
APPLIANCE CO., LTD.,
CLEVA HONG KONG LIMITED,
CLEVA NORTH AMERICA, INC., and
SEARS, ROEBUCK AND CO.,
Case No. 4:13-CV-01043 SPM
MEMORANDUM AND ORDER
This matter is before the court on (1) the Motion to Strike Declarations of Hong Chen
filed by Plaintiff Emerson Electric Co. (“Emerson”) (Doc. 134); (2) the Renewed Motion to
Dismiss filed by Suzhou Cleva Electric Appliance Co., Ltd. (“Suzhou Cleva”) and Cleva Hong
Kong Limited (“Cleva Hong Kong”) (collectively, the “Cleva Defendants” or “Defendants”)
(Doc. 131); and (3) the Motion to Amend Case Management Order filed by Emerson. (Doc.
120). For the following reasons, I will grant Emerson’s Motion to Strike, deny the Cleva
Defendants’ Motion to Dismiss, and grant Emerson’s Motion to Amend Case Management
A. Procedural Background and Background Regarding Motion to Strike
Emerson is the owner of several patents related to wet/dry vacuum cleaners. It has
brought claims of patent infringement against Suzhou Cleva, Cleva Hong Kong, Cleva North
America, Inc., and Sears, Roebuck & Co., alleging that they manufacture, use, import, sell,
and/or offer for sale in the United States one or more vacuum cleaners that infringe Emerson’s
patents. The allegedly infringing vacuum cleaners (the “Accused Products”) include various
vacuum cleaners sold under the Craftsman, Armor All, and Vacmaster trademarks.
On August 26, 2013, the Cleva Defendants filed a motion to dismiss under Rule 12(b)(2),
arguing that this court cannot exercise personal jurisdiction over them because they are both
Chinese companies that have not made, shipped, or sold the Accused Products in the United
States and because they have no contacts with Missouri. (Doc. 19). They relied primarily on
declarations of Hong Chen, the president and CEO of both companies. The court denied the
motion to dismiss without prejudice and ordered the parties to conduct jurisdictional discovery.
On December 16, 2013, Emerson’s counsel asked Defendants’ counsel to propose some
dates in early January for a deposition of Mr. Chen, and the parties agreed on a date of January 9,
2014. Emerson repeatedly asked for a location for the deposition that would work, but counsel
for Defendants did not provide one. On January 2, 2014, Emerson’s counsel stated that given the
short time frame, it would pick a location for the deposition in Hong Kong unless Emerson heard
from Defendants’ counsel. On the same day, Defendants’ counsel responded that it would let
Emerson know about availability and that it was unreasonable for Emerson to “complain about a
compressed timetable when Emerson waited until the week between Christmas and New Year’s
to request deposition dates and interpreter details.”
On January 17, 2014, Emerson filed a motion to compel jurisdictional discovery,
requesting, inter alia, that the court compel Mr. Chen to appear for a deposition in Missouri if he
would not appear voluntarily in Hong Kong. Emerson indicated that Defendants had refused to
produce Mr. Chen for deposition anywhere other than in Suzhou, China, despite the fact that
discovery in mainland China is prohibited under the Hague Evidence Convention and despite the
fact that Emerson had offered to conduct the deposition in Hong Kong or to conduct the
deposition by videoconference. (Doc. 58, at pp. 9-10). On January 22, after a hearing, the court
entered an order deferring ruling on the question of Mr. Chen’s deposition but cautioning
Defendants that if they, in bad faith, failed to produce evidence requested in jurisdictional
discovery, they risked the sanction of having such evidence excluded from consideration in a
renewed motion to dismiss.
On January 23, 2014, Emerson’s counsel emailed Defendants’ counsel, stating, “Emerson
requests that Suzhou Cleva and Cleva Hong Kong make Hong Chen available for deposition”
and indicating that the deposition should occur either in Hong Kong or in the United States. On
January 27, counsel for Defendants emailed Emerson’s counsel and said that scheduling a
deposition would be premature.
In a telephone conference, Emerson’s counsel informed
Defendants’ counsel that in light of the court’s order, if Defendants did not produce Mr. Chen for
deposition prior to renewing their motion to dismiss, Emerson would move to strike any
evidence from Mr. Chen that Defendants might rely on in that motion. Defendants’ counsel did
not agree to schedule a deposition. On February 5, 2014, Emerson withdrew its motion to
compel. (Doc. 82).
On April 1, 2014, the Cleva Defendants filed the instant renewed motion to dismiss the
case against them for lack of personal jurisdiction, again relying on the declarations of Mr. Chen.
In its response, Emerson submitted several exhibits obtained in jurisdictional discovery that it
claims refute Mr. Chen’s statements and support the exercise of personal jurisdiction over the
Cleva Defendants. In addition, on April 11, 2014, Emerson filed the instant motion to strike the
declarations of Hong Chen on the ground that Defendants have not acted in good faith to make
him available for deposition, in violation of the court’s order of January 22, 2014.
B. Background Facts Relevant to Jurisdiction1
The Accused Products are manufactured at a factory in Suzhou, China called Skybest
Electric Appliance Co. Ltd. (“Skybest”). Skybest shares an address with Suzhou Cleva. In his
deposition, Robert Davis, the president of Cleva North America, described Skybest as “the
manufacturing arm” of Suzhou Cleva. Mr. Davis did not know the precise legal relationship
between Skybest and Suzhou Cleva but testified that Hong Chen, Suzhou Cleva’s president,
would know. Documents produced by Sears reflect that, in the past, Mr. Davis described Suzhou
Cleva and Cleva North America as having a “vertically integrated manufacturing facility”
located in Suzhou, China, with no mention of Skybest.
The Accused Products are eventually sold or offered for sale at Sears retail stores in
They generally follow one of two paths to reach retailers in the United States
(including Sears): the “domestic sales” path and the “direct import” path. Accused Products that
reach U.S. retailers like Sears via the “domestic sales” path are sold by Cleva North America, a
South Carolina-based company. Cleva North America’s president, Mr. Davis, testified that
Cleva North America was formed for the purpose of selling, in North America, wet/dry vacuum
cleaners manufactured in Suzhou. Cleva North America purchases products at the Port of
Shanghai in China,2 ships them to a third-party warehouse in Alabama, and sells them to
customers, including Sears and Wal-Mart. Documentary evidence of the relationship of these
These facts are taken from the pleadings as well as documents, affidavits, and deposition
testimony obtained as part of jurisdictional discovery and submitted by the parties in support of
their respective positions.
It is not apparent from the record who Cleva North America purchases the products from or
how these purchases occur.
transactions to Missouri includes a purchase order from Wal-Mart to Cleva North America for
wet/dry vacuums with a billing address for Wal-Mart in St. Louis, Missouri.
Accused Products that reach U.S. retailers like Sears via the “direct import” sales path are
marketed in the United States by Cleva North America and sold by Cleva Hong Kong.3
According to deposition testimony, Cleva North America “fronts” marketing and advertising
expenses related to these sales, and Cleva Hong Kong reimburses Cleva North America for those
expenses. Cleva Hong Kong sells the products to customers such as Target, Sears, and Kmart,4
with delivery “FOB CN[China].” At least one of the invoices in the record indicates that the
“Destination” of the products was “USA.” In addition, although the direct import sales are for
delivery FOB China, Cleva Hong Kong pays sales commissions to Cleva North America
employees for those sales. Mr. Davis also testified that a Cleva North America employee
coordinates the direct import orders.
In addition to the direct import and domestic sales paths, there is evidence in the record
that suggests Accused Products reach retailers like Sears via a Supply Agreement between the
retailer and Suzhou Cleva. Emerson submitted a Supply Agreement in which Suzhou Cleva and
Cleva North America, listed jointly as “Seller,” agreed to sell various wet/dry vacuum cleaners
bearing the Craftsman and Vacmaster trademarks to Sears and Kmart. 5
As with Cleva North America, it is unclear from the record how Cleva Hong Kong obtains the
products to sell.
The addresses listed for these companies are in the United States but not in Missouri.
The Supply Agreement describes the seller (in part) as “Cleva Suzhou Electric Appliance Ltd”
and lists its address as 8 Ting Rong Street, Suzhou, P.R., China, which is the address of Suzhou
Cleva. Confusingly, the Supply Agreement also states that this company is organized under the
laws of Hong Kong (whereas Suzhou Cleva is apparently organized under the laws of China) and
subsequently refers to it “Cleva Hong Kong.” However, the parties do not appear to dispute that
this agreement was made by Suzhou Cleva rather than Cleva Hong Kong.
There is also other evidence of direct contact between Suzhou Cleva and Missouri.
Suzhou Cleva is named as the “Insured” on several certificates of liability insurance that insure
Missouri vendors with respect to product liability damages for “Vacuum Cleaners sold to
USA/Canada.” The Missouri vendors insured by these policies are O’Reilly Automotive, Inc., in
Springfield, Missouri; Toronado Industries, LLC, in Fenton, Missouri; and Sutherland Lumber
and/or Cimarron Lumber, in Kansas City, Missouri. Mr. Davis, the president of Cleva North
America, testified that almost all major customers require a product liability insurance policy.
He stated that he did not know who paid the premiums for the policies but that it was “basically
done through the China office.” Cleva Hong Kong and Cleva North America are listed as
additional insureds on the certificates.
The evidence discussed above suggests that that Suzhou Cleva, Cleva Hong Kong, and
Cleva North America are closely related and work together in the process by which the products
reach Sears and other U.S. retailers. Other evidence is consistent with this. Hong Chen is the
president and CEO of both Cleva Hong Kong and Suzhou Cleva, and he is one of two members
of the board of directors of Cleva North America. According to testimony of Sears employees,
he has attended meetings at the Sears office in Illinois and has attended trade shows in Las Vegas
and a dinner hosted there by “Cleva.” Mr. Chen has also worked with Mr. Davis on pricing
proposals for Sears with respect to the Accused Products. Sears employees who met Mr. Chen
testified that he “worked for Cleva,” “was the owner of Cleva,” or was “the representative from
China” who came from Cleva; they did not distinguish between the different Cleva entities.
In addition, in presentations given to Sears employees, Cleva North America president
Robert Davis stated that Cleva North America “[c]oordinates all operations with [the] Suzhou
office daily.” He described Suzhou Cleva as the “Head Office” and Cleva North America as the
“Sales Office.” Mr. Davis also testified that there are no written agreements that govern the
relationship between Cleva North America and Suzhou Cleva or between Cleva North America
and Cleva Hong Kong. Indeed, Cleva North America uses the Vacmaster trademark (owned by
Suzhou Cleva) without a formal license agreement and without paying royalties. Mr. Davis
testified that the nature of the relationship between Cleva North America and Suzhou Cleva is
such that he does not regard it as necessary to have a formal license in place.
The documentary evidence and deposition testimony produced during jurisdictional
discovery are not entirely consistent with statements contained in the declarations of Hong Chen,
the president of Suzhou Cleva and Cleva Hong Kong. In his declaration, Mr. Chen stated that
Suzhou Cleva “has never sold or offered to sell anything in the U.S., directly, through retailers,
or over the Internet.” He also stated that Suzhou Cleva has never manufactured any vacuums
anywhere, but he did not discuss the legal relationship between Suzhou Cleva and Skybest. He
further stated that Suzhou Cleva has “no contacts with the State of Missouri” and never
“contracted to insure any person, property, or risk located in Missouri at the time of contracting.”
A. Motion to Strike
The court possesses the inherent power to impose sanctions in matters arising from
discovery abuses. See Sylla–Sawdon v. Uniroyal Goodrich Tire Co., 47 F.3d 277, 280 (8th Cir.
1995); Dillon v. Nissan Motor Co., 986 F.2d 263, 267 (8th Cir. 1993). See also Chambers v.
NASCO, Inc., 501 U.S. 32, 44-45 (1991) (district courts have the inherent power to “fashion an
appropriate sanction for conduct which abuses the judicial process”). In its January 22, 2014
order, the court warned Defendants that if the court found that “Defendants, in bad faith, failed to
produce evidence—testimonial or otherwise—that (i) was requested by Plaintiff during the
course of jurisdictional discovery and (ii) was within the scope of permissible discovery,
sanctions may include the exclusion of such evidence as support for any subsequent motion to
dismiss for lack of personal jurisdiction.” (Doc. 64, at pp. 2-3). Citing that order, Emerson now
moves to strike the declarations of Hong Chen on the ground that Defendants have, in bad faith,
failed to produce Mr. Chen for deposition.
Defendants first argue that Mr. Chen’s deposition was not “requested by Plaintiff during
the course of jurisdictional discovery” because Emerson did not issue a formal notice of
deposition for Mr. Chen.
This argument is unpersuasive.
As discussed above, Emerson
repeatedly requested, by email, to depose Mr. Chen, and the parties discussed specific dates and
locations by email. Most recently, on January 23, 2014, Emerson’s counsel emailed Defendants
and stated, “Emerson requests that Suzhou Cleva and Cleva Hong Kong make Hong Chen
available for deposition” either in Hong Kong or the United States. Defendants consistently
refused these requests and offered no alternative dates or locations for the deposition. They also
opposed Emerson’s motion to compel the deposition. There is nothing to suggest that any
additional purpose would have been served by a formal notice of deposition.
Defendants further argue that Emerson’s request to depose Mr. Chen was not “within the
scope of permissible discovery” because Mr. Chen would have been required to travel over 600
miles from Suzhou, China, where he resides, to appear for a deposition in Hong Kong.
However, Emerson has submitted authority showing that Mr. Chen cannot be legally deposed in
China, and Defendants do not challenge that authority.6 Moreover, Defendants offer no evidence
United States State Department Guidelines state that under China’s Declarations and
Reservations to the Hague Evidence Convention, China does not permit attorneys to take
voluntary depositions in China for use in foreign courts. See
visited June 19, 2014. In contrast, voluntary depositions may be taken in Hong Kong.
to suggest that Defendants were willing to produce Mr. Chen in any location where a deposition
could legally have been conducted.
In addition, the suggestion that it would be unduly
burdensome for Mr. Chen to travel to Hong Kong is significantly undermined by the fact that he
is the President and CEO of a company located in Hong Kong. Mr. Chen’s unwillingness to
travel to the city where his business is located does not constitute a good-faith basis for refusing
to produce him for deposition, particularly in the absence of any attempt to explore other
In sum, the court finds that Emerson properly requested the deposition of Mr. Chen
during the course of jurisdictional discovery, the deposition was within the scope of
jurisdictional discovery, and Defendants had no good-faith basis for failing to produce (or even
attempt to produce) him for deposition. It would be unfair to permit Defendants to rely on Mr.
Chen’s statements in his declarations but then insulate those statements from any examination,
particularly when Defendants have not offered any reasonable explanation for their conduct.
Thus, in accordance with the court’s prior order, Emerson’s motion to strike the declarations of
Hong Chen will be granted. However, as discussed below, even if the motion to strike were
denied and statements of Mr. Chen were considered, the court’s conclusion regarding the motion
to dismiss would be the same.
For example, the court notes that although he serves on the board of directors of Cleva North
America and makes sales-related trips to the United States, Defendants did not offer to produce
Mr. Chen in the United States.
B. Motion to Dismiss
1. Legal Standard
The Cleva Defendants have filed a renewed motion to dismiss the claims against them for
lack of personal jurisdiction under Rule 12(b)(2). When a defendant challenges the existence of
personal jurisdiction, the plaintiff ultimately has the burden of proving the existence of
jurisdiction by a preponderance of the evidence. See Campbell Pet Co. v. Miale, 542 F.3d 879,
889 (Fed. Cir. 2008); Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 646-47 (8th Cir. 2003).8
However, when the court evaluates a Rule 12(b)(2) motion after some jurisdictional discovery
but without an evidentiary hearing to resolve disputed issues of fact, the plaintiff generally needs
only to make a prima facie showing that jurisdiction exists. See Synthes (U.S.A.) v. G.M. Dos
Reis Jr. Ind. Com. De Equip. Medico, 563 F.3d 1285, 1290-92 (Fed. Cir. 2009) (applying prima
facie standard to Rule 12(b)(2) motion after completion of some jurisdictional discovery but no
evidentiary hearing); Epps, 327 F.3d at 646-47 (8th Cir. 2003) (“While the plaintiffs bear the
ultimate burden of proof, jurisdiction need not be proved by a preponderance of the evidence
until trial or until the court holds an evidentiary hearing.”); AIT Indus. Automation, Inc. v.
Applied Robotics, Inc., No. 1:09CV471, 2013 WL 1149174, at *2 (M.D. N.C. March 19, 2013)
(prima facie standard applied where there had been jurisdictional discovery but no formal
In patent cases such as this one, the law of the Federal Circuit Court of Appeals applies to
questions pertaining to patent law, whereas the law of the regional circuit applies to purely
procedural questions. See, e.g., High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301,
1311 (Fed. Cir. 2013). Courts in this district have taken different approaches to the question of
whether the standard applicable to a Rule 12(b)(2) motion is governed by Federal Circuit law or
by the law of the regional circuit. Compare, e.g., Am. Recreation Prods., LLC v. Tennier Indus.,
Inc., --- F. Supp.2d ----, No. 4:13CV421 CDP, 2014 WL 1315182, at *2 (E.D. Mo. March 14,
2014) (applying Federal Circuit law) with Maritz Inc. v. C/Base, Inc., No. 406-CV-761 CAS,
2007 WL 433378, at *1 (E.D. Mo. Feb. 6, 2007) (applying Eighth Circuit law). Because the
standard relevant to the present case is the same under Federal Circuit and Eighth Circuit law, I
need not decide this question.
evidentiary hearing); Elan Microelectronics Corp. v. Pixcir Microelectronics Co. Ltd., No. 2:10–
cv–00014–GMN–PAL, 2012 WL 523695, at *1 & n.1 (D. Nev. Feb. 16, 2012) (same).
Here, the jurisdictional facts are disputed and there has been no evidentiary hearing, so
the prima facie standard applies. When applying the prima facie standard, the court must accept
the uncontroverted allegations in the plaintiff’s complaint as true and must resolve any factual
conflicts in the evidence in the plaintiff’s favor. Elecs. For Imaging, Inc. v. Coyle, 340 F.3d
1344, 1349 (Fed. Cir. 2003); K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92
(8th Cir. 2011).
In order for this court to exercise jurisdiction over a nonresident defendant, two
requirements must be met: (1) jurisdiction must be allowed by the Missouri long-arm statute; and
(2) constitutional due process requirements must be satisfied. Pennington Seed, Inc. v. Produce
Exchange No. 299, 457 F.3d 1334, 1343-44 (Fed. Cir. 2006). Although courts have often
collapsed the statutory and constitutional questions into a single inquiry, the Eighth Circuit has
recently analyzed Missouri Supreme Court decisions and concluded that “[t]he inquiries . . . are
separate.” See Dairy Farmers of Am., Inc. v. Bassett & Walker Int’l, Inc., 702 F.3d 472, 475 (8th
Cir. 2012) (citing Bryant v. Smith Interior Design Group, Inc., 310 S.W.3d 227, 231-32 (Mo.
2010)). Thus, I will address the statutory and due process questions separately, beginning with
the due process requirements.
a. Due Process
Due process requires that before a court exercises personal jurisdiction over a defendant,
the defendant must have “certain minimum contacts with [the forum state] such that the
maintenance of the suit does not offend traditional notions of fair play and substantial justice.”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted). In
order for there to be minimum contacts, “it is essential in each case that there be some act by
which the defendant purposefully avails itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357
U.S. 235, 253 (1958). “This purposeful availment requirement ensures that a defendant will not
be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts. . . .”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (internal quotation marks omitted).
For jurisdiction to be proper, the defendant’s conduct and connection with the forum state must
be such that it “should reasonably anticipate being haled into court there.”
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
The level of contacts required to satisfy the due process clause depends on whether the
jurisdiction asserted is “general” or “specific.” See Helicopteros Nacionales de Colombia, S.A.
v. Hall, 466 U.S. 408, 414-16 & n.8, n.9 (1984).
Emerson does not argue that general
jurisdiction exists, so I will limit my discussion to specific jurisdiction. Under Federal Circuit
law, specific jurisdiction is appropriate only if (1) the defendant purposefully directed its
activities at residents of the forum, (2) the plaintiff’s claims arise out of or relate to those
activities, and (3) the assertion of personal jurisdiction under the circumstances is reasonable and
fair. Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1363 (Fed. Cir. 2006).
(1) Purposefully Directed Activities
Emerson argues that the Cleva Defendants service Missouri consumers through an
established distribution network, which is sufficient to show purposeful direction under the
stream-of-commerce theory.9 Under the “stream-of-commerce” theory of personal jurisdiction,
“[t]he forum does not exceed its powers under the Due Process Clause if it asserts personal
jurisdiction over a corporation that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the forum state.”
Volkswagen Corp., 444 U.S. at 297-98. However, the Supreme Court has not clearly established
the requirements of this theory. In Asahi Metal Industry Co. v. Superior Court, four justices
adopted the view that it is not sufficient for a defendant to place its product into the stream of
commerce with “awareness that the stream of commerce may or will sweep the product into the
forum State”; rather, the defendant must engage in some “additional conduct” showing an intent
or purpose to serve the market in the forum state. 480 U.S. 102, 112 (1987). Another four
justices, however, found that such “additional conduct” is not necessary, as long as the defendant
is aware that the final product is being marketed in the forum state. Id. at 117 (Brennan, White,
Marshall, & Blackmun, JJ., concurring in part and concurring in the judgment).
The Federal Circuit has declined to decide which of the Asahi approaches to adopt.10 See
AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1363-67 (Fed. Cir. 2012). The Federal
Circuit set forth its approach to the stream of commerce theory in Beverly Hills Fan Co. v. Royal
Sovereign Corp., 21 F.3d 1558, 1564 (Fed. Cir. 1994), a case similar to the instant case. In
Emerson also argues that Suzhou Cleva, Cleva Hong Kong, and Cleva North America are arms
of the same business group, such that Cleva North America’s contacts with Missouri should be
imputed to the Cleva Defendants. Because I find that Suzhou Cleva’s and Cleva Hong Kong’s
own contacts with Missouri are sufficient to show activities purposefully directed at Missouri
residents, I need not address this alternative argument.
The law of the Federal Circuit, rather than the law of the Eighth Circuit, governs questions
concerning the application of the stream of commerce theory of jurisdiction. See AFTG-TG, 689
F.3d at 1367 n.1; Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir.
1994) (finding that creation of a uniform body of Federal Circuit law in the area of stream-ofcommerce theory would promote judicial efficiency, be consistent with its mandates, and not
create undue conflict and confusion in the district courts).
Beverly Hills Fan, a patentee filed suit in Virginia against a Chinese manufacturer and a New
Jersey importer, alleging that they were selling the accused products to customers in the United
States (including in Virginia), through intermediaries. Id. at 1560, 1563. The plaintiff submitted
evidence that at least fifty-two of the accused products were sold at six Virginia outlets of the
Builder’s Square retail chain. Id. at 1561. The defendants moved to dismiss for lack of personal
jurisdiction, providing evidence that they had no license for doing business in Virginia, had no
assets or employees in Virginia, had no agents for service of process in the forum, and had not
done any direct sales in Virginia. Id. at 1560. The court held that the facts before it were
sufficient to establish the purposeful minimum contacts required for specific personal
jurisdiction. Id. at 1566. The court noted that the presence of the products at several retail
outlets in Virginia reflected an ongoing relationship and it inferred that the distribution channel
formed by defendants and Builder’s Square had been intentionally established. Id. at 1564. It
Defendants argue that their contacts with Virginia were insufficient to give them
warning that litigation in Virginia might ensue. We disagree. The allegations are
that defendants purposefully shipped the accused fan into Virginia through an
established distribution channel. The cause of action for patent infringement is
alleged to arise out of these activities. No more is usually required to establish
Id. at 1565. The court acknowledged the Supreme Court’s split in Asahi but did not resolve it,
finding that the plaintiff had made the required showing under either version of the theory
because “defendants, acting in consort, placed the accused fan in the stream of commerce, they
knew the likely destination of the products, and their conduct and connections with the forum
state were such that they should reasonably have anticipated being brought into court there.” Id.
Since Beverly Hills Fan, numerous district courts applying Federal Circuit law have
found specific jurisdiction proper where a foreign manufacturer purposefully used intermediaries
to reach a forum’s consumers through the stream of commerce. See Procter & Gamble Co. v.
Team Techs., Inc., No. 1:12-CV-552, 2012 WL 5903126, at *4-*5 (S.D Ohio Nov. 26, 2012)
(specific personal jurisdiction proper under Beverly Hills Fan where a foreign manufacturer
made products with packaging stating that the products were to be sold at Rite Aid and CVS, the
manufacturer sold the products to an intermediary, the intermediary sold them to Rite Aid and
CVS stores, and the products were sold in CVS and Rite Aid stores in the forum state); Momenta
Pharm. Inc. v. Amphastar Pharm., Inc., 841 F. Supp. 2d 514, 520-21 (D. Mass. 2012) (specific
personal jurisdiction present based on offers to sell accused products to intermediaries who
serviced the Massachusetts market, because the defendants “exploited the typical industry
medium by which manufacturers can reach the Massachusetts pharmaceutical market and
thereby availed themselves of the privilege of doing business in Massachusetts”); LG Elecs., Inc.
v. Asutek Computers, 126 F. Supp. 2d 414, 420 (E.D. Va. 2000) (“Regardless of whether Asutek
delivered the products in Taiwan or directly to Virginia, Asutek places the products into the
stream of commerce with the expectation that Asus will further assemble the products and
distribute them throughout the United States. Such distribution’s destination included retailers in
Virginia. . . . Asustek purposefully directed its activities at Virginia because it continued to
supply goods to Asus with the presumed knowledge that they would arrive in Virginia.”).
As in the above cases, the facts developed by Emerson show that Suzhou Cleva and
Cleva Hong Kong purposefully directed their activities at Missouri residents because they placed
the Accused Products into established distribution channels with expectation that they would be
sold throughout the United States, including in Missouri. Viewing the evidence in the light most
favorable to Emerson, Suzhou Cleva manufactures the Accused Products.
America’s presentations to Sears indicated that Cleva North America and Suzhou Cleva had a
“vertically integrated manufacturing facility” in Suzhou, China; the president of Cleva North
America described the factory that manufactures the products as “the manufacturing arm” of
Suzhou Cleva; and Suzhou Cleva shares an address with the factory that manufactures the
Accused Products. I reject Defendants’ suggestion that this evidence is insufficient to show that
Suzhou Cleva manufactured the products because Cleva North America’s president did not know
the precise legal relationship between Suzhou Cleva and the factory. Defendants refused to
produce for deposition the person that Mr. Davis testified did have such knowledge, Hong Chen.
They also failed to produce any of their own evidence regarding the legal relationship between
Suzhou Cleva and the factory.
I also find the evidence sufficient to show that Suzhou Cleva and Cleva Hong Kong
purposefully used established distribution channels to reach customers in Missouri. In the
domestic sales path, products manufactured by Suzhou Cleva are transferred to Cleva North
America, a company formed for the express purpose of selling Suzhou Cleva’s products in North
America that markets and sells Suzhou Cleva’s products to nationwide U.S. retailers with outlets
in Missouri, including Sears and Wal-Mart. In the direct import sales path, Cleva Hong Kong
pays Cleva North America to market Suzhou Cleva’s products in the United States, then sells
Suzhou Cleva’s products to nationwide U.S. retailers with outlets in Missouri, including Sears
and Wal-Mart. Finally, in addition to these sales through Cleva North America and Cleva Hong
Kong, the Supply Agreement shows that Suzhou Cleva directly sold or offered for sale wet/dry
vacuum cleaners to Sears and Kmart.11 The Accused Products were eventually offered for sale
in a Sears outlet in Missouri, and it is reasonable to assume that the products arrived there
through these established distribution channels. It is also significant that Suzhou Cleva and its
president are actively involved in establishing and maintaining these distribution channels: Cleva
North America “coordinates all operations with Suzhou office daily,” and Hong Chen is on the
board of directors of Cleva North America, attends presentations with Sears employees in the
United States, and works with the president of Cleva North America on developing pricing
proposals for Sears.
Suzhou Cleva’s and Cleva Hong Kong’s decisions to sell their products to nationwide
retailers with outlets in Missouri provide strong evidence of their intent and purpose to reach
Missouri customers. See Estes v. Midwest Prods., Inc., 24 F. Supp. 2d 621, 630 (S.D. W.Va.
1998) (“[The defendant] manufactures finished products which it directs to the ‘national market’
directly through its sales to national retailers Kmart, Wal-Mart, and others. The defendant’s
intent and purpose are completely revealed in its decision to sell through national retail chains.”);
Kernius v. Int’l Elecs., Inc., 433 F. Supp. 2d 621, 627 (D. Md. 2006) (“A corporation cannot sell
its products to national retailers such as RadioShack, Best Buy, Target, and Wal-Mart and then
claim that it is surprised to be haled into court in a particular State . . . .”); Aten Int’l Co. v. Emine
Defendants suggest that the Supply Agreement does not show either a sale or offer to sell
because the buyer’s obligation to purchase does not arise until it issues a purchase order. I find
this argument unpersuasive. Even if the buyer did not have an obligation to buy the products
covered by the agreement, the contract clearly states that the seller (Suzhou Cleva and Cleva
North America) “agrees to sell to Buyer the products listed in the attached Exhibit A.” This
appears to the court to be at least sufficient to establish an “offer for sale” for purposes of patent
infringement. See Superior Indus., LLC v. Thor Global Enters. Ltd., 700 F.3d 1287, 1294 (Fed.
Cir. 2012) (“An ‘offer for sale’ sufficient to give rise to liability for patent infringement must
meet the traditional contract law definition of that term. Thus, the defendant must communicate
a manifestation of willingness to enter into a bargain, so made as to justify another person in
understanding that his assent to that bargain is invited and will conclude it.”) (internal citations
and quotation marks omitted).
Tech. Co., 261 F.R.D. 112, 119 (E.D. Tex. 2009) (continuous sales to a U.S. nationwide retailer
provided a strong indication of an intention to sell products nationwide, including in Texas).
In addition, Defendants’ intent to reach Missouri residents is shown by the fact that
Suzhou Cleva purchased product liability insurance policies covering Missouri vendors of
vacuum cleaners. Specifically, the record contains three Certificates of Liability Insurance for
“vacuum cleaners sold to U.S.A.,” each showing coverage for a different Missouri company
(O’Reilly Automotive, Inc., in Springfield, Missouri; Tornado Industries, LLC/Tacony
Corporation, Fenton, Missouri; and Sutherland Lumber/Cimarron Lumber, Kansas City,
Missouri). Finally, some additional evidence is provided by a purchase order issued by WalMart for the Accused Products that provides for direct billing to “Wal-Mart Stores, Inc./Sam’s
Club” in St. Louis, Missouri.
Cleva Hong Kong’s argument that it did not sell any products in the United States
because it sold the products FOB Shanghai, China is unpersuasive. FOB, or “free on board,” is
“a method of shipment whereby goods are delivered at a designated location, usually a
transportation depot, at which legal title and thus the risk of loss passes from seller to buyer.”
MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1374 n.3
(Fed. Cir. 2005). The Federal Circuit has repeatedly rejected the notion that an FOB term in a
contract establishes the place where a sale occurred for purposes of a patent infringement case.
See S.E.B. S.A. v. Montgomery Ward & Co., 594 F.3d 1360, 1375 (Fed. Cir. 2010) (rejecting the
defendant’s argument that because its sales of products to American retailers were made FOB
Hong Kong or mainland China, those sales occurred overseas); N. Am. Philips Corp. v. Am.
Vending Sales, Inc., 35 F.3d 1576, 1579-80 (Fed. Cir. 1994) (rejecting argument that goods
delivered FOB outside of Illinois were not sales in Illinois). See also ATEN Int’l., 261 F.R.D. at
119-20 (finding a foreign manufacturer’s FOB shipping term “irrelevant” to the analysis of
whether it had purposefully directed its products to Texas through the stream of commerce in a
patent infringement case).
In sum, the facts here are sufficient to satisfy the standard for purposefully directed
activity articulated in Beverly Hills Fan and the other stream of commerce cases cited above. As
in Beverly Hills Fan, “defendants, acting in consort, placed the accused [products] in the stream
of commerce, they knew the likely destination of the products, and their conduct and connections
with the forum state were such that they should reasonably have anticipated being brought into
court there.” 21 F.3d at 1566. Like the court in Beverly Hills Fan, this court need not resolve
the Asahi split. This is not a case in which defendants were simply “aware that the stream of
commerce may or will sweep the product into the forum State,” Asahi, 480 U.S. at 112. Instead,
the Cleva Defendants and their President and CEO (Hong Chen) deliberately established and
used a distribution network designed to reach customers throughout the United States, including
Missouri, and they did reach customers in Missouri. They engaged in sufficient “additional
conduct” to satisfy the more demanding of the two Asahi tests.
The court’s analysis would not change if Hong Chen’s declarations were considered. As
Defendants point out, Mr. Chen stated in his declaration that Cleva Hong Kong has never “sold,
or offered to sell, in the U.S., any of the [Accused Products], directly, through retailers, or over
(Doc. 21-1, at ¶ 20).
However, Mr. Chen’s statement is refuted by the
documentary and testimonial evidence showing that Cleva Hong Kong sells the Accused
Products to Kmart, Sears, and Target. It appears from Mr. Chen’s declaration that he believes
that because the products were sold FOB China, Cleva Hong Kong did not sell them in the
United States; however, as discussed above, that position is legally unsupportable. Mr. Chen
also stated that Suzhou Cleva has “never sold or offered to sell anything in the U.S., directly,
through retailers, or over the Internet,” has never manufactured any vacuums, and has no
contacts with Missouri. (Id. ¶¶ 6-7, Doc. 27-1, ¶ 1). However, the evidence refutes these
statements: Suzhou Cleva was the “Seller” in an agreement to sell wet/dry vacuum cleaners to
Sears and Kmart; evidence suggests that Suzhou Cleva had a vertically integrated manufacturing
facility that made the products; and Suzhou Cleva purchased insurance policies to cover
Missouri retailers for product liability suits related to the products. Mr. Chen’s conclusory and
unexamined statements do not negate this evidence, particularly given that the court must resolve
conflicts in the evidence in favor of Emerson.
(2) Arising Out of or Relating to Defendants’ Activities
The exercise of specific jurisdiction also requires that the action arise out of or relate to
the defendant’s activities with the forum state. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344,
1350 (Fed. Cir. 2003). This is a patent infringement action based on the defendants’ alleged
manufacture, use, import, sale, and/or offer for sale of the allegedly infringing wet/dry vacuum
cleaners. Defendant’s contacts with Missouri relate to their indirect sales of these products into
Missouri. Thus, this action arises from and relates to Defendants’ activities with Missouri.
(3) Reasonableness and Fairness
“Even if the requisite minimum contacts have been found through an application of the
stream of commerce theory or otherwise, if it would be unreasonable for the forum to assert
jurisdiction under all the facts and circumstances, then due process requires that jurisdiction be
denied.” Beverly Hills Fan, 21 F.3d at 1568. However, “defeats of otherwise constitutional
personal jurisdiction [under this prong of the analysis] are limited to the rare situation in which
the plaintiff’s interest and the state’s interest in adjudicating the dispute in the forum are so
attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation
within the forum.” Akro Corp. v. Luker, 45 F.3d 1541, 1549 (Fed. Cir. 1995) (quotation marks
omitted). See also Burger King, 471 U.S. at 476-77 (factors the court may consider include the
burden on the defendant, the interests of the forum state, the plaintiff’s interest in obtaining
relief, the interstate judicial system’s interest in obtaining the most efficient resolution of
controversies, and the shared interest of the several states in furthering fundamental substantive
Defendants do not argue that this is one of those rare cases that should be decided on this
prong, nor does the record support such a finding. Emerson’s interest in litigating this action in
Missouri is great, as its principal place of business is in Missouri. Missouri’s interests in the
dispute are significant, as it has an interest in addressing the injuries that occur in the state from
the sales of infringing products in Missouri. Although there is a burden on the Cleva Defendants
associated with litigating in Missouri because of their locations in China, “progress in
communications and transportation has made the defense of a lawsuit in a foreign tribunal less
burdensome.” World–Wide Volkswagen, 444 U.S. at 294 (quotation marks omitted). Moreover,
given the Cleva Defendants’ decision to avail themselves of the benefits of selling their products
to retailers with outlets throughout the United States, it is neither unfair nor unreasonable to
expect them to appear in court in one of the states containing those retail outlets.
For all of the above reasons, the exercise of personal jurisdiction in this case is consistent
with due process requirements.
b. Missouri’s long-arm statute
Missouri’s long-arm statute authorizes personal jurisdiction over defendants who, inter
alia, engage in “[t]he commission of a tortious act within this state” or in “[t]he transaction of
any business within this state” Mo. Rev. Stat. § 506.500.1. The statute will be interpreted “to
provide for jurisdiction, within the specific categories enumerated in the statute, to the full
extent permitted by the due process clause . . . .” State ex rel. Metal Serv. Ctr. of Ga., Inc. v.
Gaertner, 677 S.W.2d 325, 327 (Mo. 1984).
The Missouri Supreme Court has held that
“extraterritorial [tortious] acts that produce consequences in the state” are covered by the tortious
act provision of the long-arm statute. Bryant v. Smith Interior Design Group, Inc., 310 S.W.3d
227, 232 (Mo. 2010). See also Furminator, Inc. v. Wahba, No. 4:10CV01941 AGF, 2011 WL
3847390, at *1-*2 (E.D. Mo. Aug. 29, 2011) (finding the tortious acts provision of Missouri’s
long-arm statute satisfied in a trademark infringement case where the injury was felt in Missouri,
because “Missouri's long-arm statute covers extraterritorial tortious acts that yield consequences
in Missouri.”) (citing Bryant, 310 S.W.3d at 232)).
In patent infringement cases, the Federal Circuit has held that “the situs of the injury is
the location, or locations, at which the infringing activity directly impacts on the interests of the
patentee.” Beverly Hills Fan, 21 F.3d at 1571. Thus, in a case involving a foreign manufacturer
who sold infringing products to intermediaries who then sold the products in Virginia, the situs
of the injury was Virginia. Id. at 1569-71 (finding long-arm statute provision covering “causing
tortious injury in this Commonwealth by an act or omission outside this Commonwealth” was
satisfied by actions of foreign manufacturer).
The principle articulated in Beverly Hills Fan, taken together with the Missouri Supreme
Court’s holding that extraterritorial acts producing consequences in the state are covered by the
tortious act provision, suggests that when a foreign manufacturer sells infringing products into
Missouri through intermediaries, the manufacturer’s extraterritorial acts cause injury in Missouri
and thus are covered by the Missouri long-arm statute. Here, as discussed at length above, the
evidence shows that Suzhou Cleva and Cleva Hong Kong sell the Accused Products to Missouri
customers through intermediaries, and the Accused Products are in fact offered for sale at Sears
retail outlets in Missouri. Thus, I find that the alleged tortious acts of the Defendants, even if
extraterritorial, yielded an injury in Missouri and are covered by the long-arm statute. I need not
reach the question of whether any other provisions of the long-arm statute are satisfied.
In sum, Emerson has made the required prima facie showing that this court may exercise
personal jurisdiction over Cleva Hong Kong and Suzhou Cleva, because both the requirements of
Missouri’s long-arm statute and the requirements of the due process clause are satisfied.
C. Motion to Amend Case Management Order
Emerson has moved to amend the Fourth Amended Case Management Order to extend
certain deadlines for discovery and to continue the trial date. Defendants oppose the motion. In
light of the instant order, the court finds it appropriate to extend the deadline for Emerson to seek
discovery from Suzhou Cleva and Hong Kong and to complete other discovery that may be
impacted by the inclusion of these parties in the case. The court will order the parties to submit a
joint proposed amended case management order and participate in a scheduling conference, after
which the court will issue an amended case management order.
For all of the reasons stated above,
IT IS HEREBY ORDERED that Emerson’s motion to strike the declarations of Hong
Chen (Doc. 134) is GRANTED.
IT IS FURTHER ORDERED that Suzhou Cleva Electric Appliance Co., Ltd. and
Cleva Hong Kong Limited’s renewed motion to dismiss for lack of personal jurisdiction (Doc.
131) is DENIED.
IT IS FURTHER ORDERED that Emerson’s motion to amend the case management
order (Doc. 120) is GRANTED.
IT IS FURTHER ORDERED that the parties shall meet and confer and then submit a
joint proposed amended case management order within fourteen (14) days of the date of this
Memorandum and Order.
IT IS FURTHER ORDERED that a scheduling conference is set for July 21, 2014, at
12:30 p.m, in the chambers of the undersigned, 13-South. At the scheduling conference, counsel
will be expected to discuss the deadlines and trial date set forth in the joint proposed case
management order. After the scheduling conference, the court will issue an amended case
Dated this 1st day of July, 2014.
/s/ Shirley Padmore Mensah
SHIRLEY PADMORE MENSAH
UNITED STATES MAGISTRATE JUDGE
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