Morris et al v. Lumber Liquidators
Filing
16
STATE COURT ORDER: Denying Motion to Dismiss Signed by State Court Judge on 7/13/2016. (HEG, )
•
•
FILED
JUL 1 3 2016
MARILYN A. CRAFT Court Clerk
_______
Depu~
MONTANA FIFTH JUDICIAL DISTRICT COURT, JEFFERSON COUNTY
HEATHER AND COLTON MORRIS,
Individually and on Behalf of Their Minor
Children, J.M., W.M. and M.M.,
Plaintiffs,
v.
LUMBER LIQUJDA TORS, INC.,
Defendant.
--------
)
)
)
)
)
)
)
)
)
)
)
Cause No. DV-2015-88
'\)J " I Ip- t.\ c,~ I~ ,
UV
ORDER DENYING
MOTION TO DISMISS
FI l ED
SEP 2 8 2016
Clerk, U.S District Court
D1stnct Of Montana
Helena
______ _ )
Defendant Lumber Liquidators, Inc. ("LLI") filed a motion to dismiss asserting lack of
personal jurisdiction. The parties briefed the motion. The Court held that Montana's long-arm
provision applied to LLl's alleged conduct but a fact dispute precluded a ruling on whether
jurisdiction would violate due process. The parties appeared in eourt for an evidentiary hearing
and thereafter submitted supplemental briefs.
BACKGROUND
LL! is a Delaware Corporation with its principal place of business in Virginia. (Comp!.,
ii 3). The Morrises reside in Whitehall, Montana. (Comp!., iJ 1). The Morrises purchased
flooring from LL! on July 17, 2014. (Comp!.,
iJ 6). After installing the flooring in their home,
the Morrises allege that their children experienced headaches and trouble breathing. (Comp!., iii!
10-11 ). The Morrises allege that they performed a test which indicated "elevated" levels of
Morris v. Lumber Liquidators, Inc.
Page 1
•
•
formaldehyde. (Comp!.,
'1f
13). After complaining to LU, LL! sent a formaldehyde test kit
directly to the Morrises' home in Montana. (Comp!., '1114).
The Complaint originally alleged that Morrises purchased the flooring "at the Home
Depot in Idaho Falls."
(Comp!.,
'1f
6).
However, the Morrises later submitted an affidavit
recanting this allegation and asserting that they actually "ordered the product online" and had it
"shipped ... from the Idaho Lumber Liquidators location directly to [their] home in Whitehall,
Montana." (Morris Aff.,
'1f
5). LL! disputed this allegation. LL! maintained that it had "no[]
record of a direct sale to the Morrises." (Reply Br. at 6). The parties appeared for a hearing to
resolve this factual dispute.
At the hearing, Morrises introduced a Uniform Straight Bill of Lading identifying
"Lumber Liquidators Inc" as the shipper and "Barbara Wass" as the recipient. (May 4, 2016
Hrg. Exh. 2). Barbara Wass is plaintiff Colton Morris's mother. The Morrises explained that
they put the purchase on Wass's credit card and thus listed her as the recipient, even though LL!
delivered the flooring directly to the Morrises' home. The Bill of Lading describes the items
shipped as "laminate flooring" and lists a delivery address of "370 Highway 55, Whitehall,
Montana." (Exh. 2).
The Morrises also introduced into evidence a copy of an e-mail communication they
received from LLI disclosing the results of the formaldehyde test. (May 4, 2016 Hrg. Exh. 4).
In the e-mail, LLl's "customer team" states, "[y]our results show that formaldehyde levels in
your home fall within the World Health Organization's (WHO) guidelines for acceptable indoor
air formaldehyde concentrations.'' (Exh. 4 at 1). The communication went on to state that "it
does not appear that your floor is contributing significantly to any abnormal exposure to
formaldehyde." (Exh. 4 at 1).
Morris v. Lumber Liquidators, Inc.
Page 2
•
•
DISCUSSION
When confronted with a motion to dismiss for lack of personal jurisdiction, Montana
courts follow a two-step process. Milky Whey, Inc. v. Dairy Partners, Inc., 2015 MT 18,
378 Mont. 75, 342 P.3d 13.
~
18,
The Court must first determine whether Montana's long-arm
provision confers jurisdiction. Id. If so, the Court then determines whether the exercise of
jurisdiction complies with due process. Id. The Court already concluded that Montana's longarm statute confers jurisdiction over LL!. See Order Denying Motion and Setting Hearing (April
13, 2016). Accordingly, the Court moves directly to due process considerations.
Due process requires the existence of "minimum contacts" between the defendant and the
forum state "such that the maintenance of the suit does not offend "traditional notions of fair play
and substantial justice." Inf'/ Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90
L. Ed. 95, 102 (1945). Personal jurisdiction comes in two forms: general and specific. A court
with general jurisdiction may adjudicate any claims against the defendant-even those that
occurred entirely in a different state. Goodyear Dunlop Tires Operations, SA. v. Brown, 564
U.S. 915, 919, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796, 803 (2011).
However, general
jurisdiction exists only when the defendant's contacts with the forum state are so "continuous
and systematic" as to render the defendant "essentially at home" in the forum state. Goodyear,
564 U.S. at 919. Neither party argues that general jurisdiction exists in this case.
The parties' dispute focuses on whether this Court has specific jurisdiction. Specific
jurisdiction exists when an out-of-state defendant "submits to the judicial power of an otherwise
foreign sovereign" and gives the court power to adjudicate claims "arising out of or related to the
defendant's contacts with the forum." J. Mcintyre Mach. Ltd. Inc. v. Nicastro, 564 U.S. 873,
881, 131 S. Ct. 2780, 2788, 180 L. Ed. 2d 765, 775 (2011). "[R]andom, isolated, or fortuitous"
Morris v. Lumber Liquidators, Inc.
Page3
•
•
contacts will not suffice. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S. Ct. 1473,
1478, 79 L. Ed. 2d 790, 797 (1984). However, "even a single act can support jurisdiction" if it
has a "substantial connection" with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S.
462, 476 n. 18, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528, 543 (1985). The quantity of the
defendant's contacts does not control. Instead, the inquiry focuses on whether by engaging in
activities in the forum state the defendant has "purposefully avail[ed] itself of the privilege of
conducting activities" in that state, thereby "invoking the benefits and protections of its Jaws."
Nicastro, 564 U.S. at 881.
LLI Purposefully Availed Itself of Montana Law
Disputes about specific jurisdiction frequently arise in cases where a product
manufactured in a foreign state causes harm in the forum state. The United States Supreme
Court first confronted this situation in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
100 S. Ct. 559, 62 L. Ed. 2d 490, (1980). The plaintiff had purchased a car in New York and
attempted to sue the dealer and distributor in Oklahoma, where the accident occurred. WorldWide, 444 U.S. at 295. The Court rejected this attempt, holding that "the mere unilateral activity"
of the plaintiff in transporting the product across state lines "cannot satisfy the requirement of
contact with the forum State." Id. at 298. Accordingly, Oklahoma courts lacked jurisdiction to
adjudicate the dispute. The Court rejected a plaintiffs attempt to establish jurisdiction on "the
fortuitous circumstance" that a product purchased in one state happened to cause harm in
another. Id. at 288.
Subsequent cases have attempted to refine this holding but have resulted in plurality
decisions that provide little clarity.
In Asahi Metal and Industry Co. v. Superior Court, a
Taiwanese tire manufacturer filed a cross-claim against its Japanese supplier of the tire valves in
Morris v. Lumber Liquidators, Inc.
Page4
•
•
a case arising out of an automobile accident that occurred in California. 480 U.S. 102, 106, 107
S. Ct. 1026, 1029, 94 L. Ed. 2d 92, 100 (1987). Although the valve supplier knew its product
would eventually be distributed throughout the United States and California, the Supreme Court
held that California courts lacked personal jurisdiction over the Japanese corporation. Id. at 114.
For a four-justice plurality, Justice O'Connor wrote that merely placing a product "into the
stream of commerce, without more, is not an act of the defendant purposefully directed toward
the forum State." Id. at 112. The plurality held that the plaintiff must show "something more" to
establish that the defendant purposefully invoked the laws of California. Id. Justices Brennan
and Stevens agreed that personal jurisdiction did not exist but would have rested that holding on
due process rather than the Court's stream of commerce theory. Id. at 116-17.
In Nicastro, a New Jersey resident brought a products liability suit in New Jersey state
court for compensation for injuries he received while operating a product manufactured by a
British Corporation. Nicastro, 564 U.S. at 878. The machine at issue reached New Jersey
through an American distributor. Id. at 878. The manufacturer exercised no control over the
distributor's sales and never shipped any of its products directly into New Jersey. Id. For a fourjustice plurality, Justice Kennedy conducted a detailed analysis attempting to harmonize Asahi
and World-Wide Volkswagen.
Id. at 879-885. The plurality ultimately concluded that New
Jersey courts lacked jurisdiction because the plaintiff failed to establish that the manufacturer
"engaged in conduct purposefully directed at New Jersey." Id. at 886. Justices Breyer and Alita
would have reached the same conclusion based solely on precedent and without making any
"broad pronouncements that refashion basic jurisdictional rules." Id. at 887, 890.
Although these cases failed to establish a majority position on the "stream of commerce"
theory, none of them involved a situation where the defendant shipped its product directly into
Morris v. Lumber Liquidators, Inc.
Page 5
•
the forum state.
•
Unlike a product that reaches the forum state through the "stream of
commerce," a product that reaches the forum state by direct shipment from the defendant does
not involve a "fortuitous circumstance" or "unilateral activity" by a third party. On the contrary,
the defendant who ships his product directly into the forum state has knowingly engaged in
conduct with the expectation that it will benefit from the protections of the forum state's laws.
Thus, lower courts have held that a knowing shipment into the forum state suffices to confer
personal jurisdiction, at least where the plaintiff and defendant exchanged communications
regarding the purchase. Heavy Iron Oilfield Servs., L.P. v. Mt. Equip. of N.M, No. 14-39, 2014
U.S. Dist. LEXIS 107648 (W.D. Pa., Aug. 6, 2014); CMMC v. Salinas, 929 S.W.2d 435 (Tex.
1996).
In Heavy Iron, for example, the plaintiff purchased oilfield equipment from the
defendant, a New Mexico company, which shipped the equipment directly to plaintiff. Heavy
Iron, 2014 U.S. Dist. LEXIS 107648, *2.
The plaintiff sued in Pennsylvania, alleging the
equipment failed to conform to industry standards. Id. at *3. The defendant argued that the
court lacked personal jurisdiction because the defendant did not solicit business in Pennsylvania,
direct any business activities toward Pennsylvania residents, or employ an agent in Pennsylvania.
Id. at *8. In addition, the defendant emphasized that "it was Plaintiff that solicited business from
Defendant in New Mexico." Id. at *8-9. The court held that a "singular contact with a forum
state supports the exercise of specific jurisdiction over a defendant where the nature and the
quality of the contact provides a substantial connection with the forum." Id. at *I 0-11. The
court held that by "shipp[ing] the [equipment] to Plaintiff in Pennsylvania" the defendant
"targeted" Pennsylvania and benefited from the protection of its laws and therefore should
reasonably have anticipated being haled into court there. Id. at *I 0. Other courts have reached
Morris v. Lumber Liquidators, Inc.
Page 6
•
•
the same result. See, e.g., Xia Zhao v. Skinner Engine Co., No. 2:11-CV-07514-WY, 2012 U.S.
Dist. LEXIS 160099, * 19 (Nov. 8, 2012) (holding that single, knowing shipment of machine into
the forum state sufficed to confer personal jurisdiction); One World Botanicals v. Gulf Coast
Nutritionals, 987 F. Supp. 317 (D.N.J. 1997) (same).
At least one lower court has reached a different conclusion in a case where the plaintiff
purchased the product through an intermediary. In CMMC v. Salinas, 929 S.W.2d 435 (Tex.
1996), for example, a Texas company contacted the manufacturer's regional distributor about
purchasing a machine. The distributor ordered the machine from an out-of-state manufacturer
and had the manufacturer ship the machine directly to the company in Texas. An employee
sustained injuries while operating the machine and sued in Texas state court. Observing that the
Texas company "never had any contacts at all with [the manufacturer]," the Court held that
Texas Jacked personal jurisdiction over the manufacturer. Id. at 339-440. These facts obviously
differ from this case.
After receiving an order from Morrises, LL! shipped its product directly into Montana.
Unlike the defendants in Asahi, Nicastro, or CMMC, the defendant did not use an intermediary
or distributor. LL! cannot argue that the "unilateral activity" of some third party caused their
product to arrive in this state.
LL! was not required to guess whether its product could
eventually reach Montana through some nonspecific "stream of commerce." LL! knew that its
product would reach Montana and that it would receive the benefits and protections of Montana
law. As in Heavy Iron, this conduct suffices to establish that LL! targeted Montana and should
reasonably have anticipated defending a suit in this state. In addition, when the Morrises
expressed concern about the product causing illness, LL! sent a test kit and communicated the
results directly to the Morrises.
Morris v. Lumber Liquidators, Inc.
Page7
•
•
The Montana Supreme Court has not had occasion to rule in a case involving a single
shipment. However, in B.T Metal Worh v. United Die & Mfg. Co., 2004 MT 286, 323 Mont.
308, JOO P.3d 127, the Court relied heavily on the fact that the defendant "knowingly shipped its
product into Montana on a number of occasions" in holding that the requisite contacts existed for
Montana to assert personal jurisdiction. B. T Metal Worh,
ii 36.
It is reasonable to conclude that
the Montana Supreme Court would apply similar reasoning in a single shipment case in light of
the United States Supreme Court's clear holding that "a single act can support jurisdiction."
Burger King, 471 U.S. at 476 n. 18 (citing McGee v. Int'! Life Ins. Co., 355 U.S. 220, 78 S. Ct.
199, 2 L. Ed. 2d 223 (1957)).
LL! purposefully availed itself of the privilege of conducting business in Montana when
it knowingly shipped its product into this state.
The Remaining Elements Required for Personal Jurisdiction Exist
Two additional elements must exist: (1) the plaintiffs claim must arise out of or result
from the defendant's forum-related activities and (2) the exercise of jurisdiction must be
reasonable. Bunch v. Lancair Int'! Inc., 2009 MT 29,
ii
19, 349 Mont. 144, 202 P.3d 784 (citing
Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977)).
As to the first requirement, the very shipment of product that confers jurisdiction over
LL! allegedly caused the Morrises' injuries. Thus, it is clear that the Morrises claim "arises out
of or results from" LL!' s business activities in Montana.
As to the second requirement, "once the plaintiff demonstrates that the ... defendant has
purposefully availed itself of the privilege of conducting activities in Montana, a presumption of
reasonableness arises, which a defendant can overcome only by presenting a compelling case
Morris v. Lumber Liquidators, Inc.
Page 8
•
that jurisdiction would be unreasonable." Bunch,
iJ
•
41.
The Montana Supreme Court has set
forth seven nonexclusive factors for district courts to consider:
I. The extent of defendant's purposeful interjection into Montana;
2. The burden on defendant of defending in Montana;
3. The extent of the conflict with the sovereignty of defendant's state;
4. Montana's interest in adjudicating the dispute;
5. The most efficient resolution of the controversy;
6. The importance of Montana to plaintiffs interest in convenient and effective relief; and
7. The existence of an alternative forum.
Simmons Oil Corp. v. Holly Corp., 244 Mont. 75, 87-88, 796 P.2d 189, 196-97 (1990). Only in
"rare cases" will an exercise of personal jurisdiction over a defendant who has purposefully
availed itself of the privilege of conducting activities in the forum state fail the reasonableness
test. Asahi, 480 U.S. at 116 (Brennan, J., concurring); see also Nielsen Idaho Tool & Eng'g
Corp. v. Scepter Corp., No. l:ll-cv-00058-BLW, 2011 U.S. Dist. LEXIS 107870, *15 (D. Idaho
2011 ).
LLI relies on two factors to argue that the exercise of jurisdiction in this case is
unreasonable. First, LLI contends that it "did not purposefully interject itself into Montana."
(Opening Br. at 10). As already discussed, LLI purposefully availed itself of the privilege of
conducting business in Montana when it sent its product and a test kit into Montana and
communicated directly with customers in Montana. This argument is not persuasive and need
not be reviewed again.
Second, LLI argues that the federal Panel on Multi-District Litigation has consolidated
similar cases in the federal courts for pretrial proceedings pursuant to 28 U.S.C. § 1407.
Morris v. Lumber Liquidators, Inc.
Page9
•
•
(Opening Br. at 10). Morrises suggest that this case should likewise be resolved in federal court.
However, a federal court has jurisdiction over a defendant only ifthe defendant "is subject to the
jurisdiction of a court of general jurisdiction in the state where the district court is located." Rule
4(k), Fed. R. Civ. P. If this Court lacks jurisdiction, the federal court for the district of Montana
lacks jurisdiction. If accepted, LLl's argument inevitably leads to the conclusion that Morrises
must file their complaint in Virginia. 1 Such a forum would be highly inconvenient to the
Morrises.
LLI has not explained why its burden of defending this case is unreasonable. Nor has
LLI identified any conflict with the sovereignty of its home state. Montana has an interest in
adjudicating the rights of consumers who suffered injuries in this state. LLI has not put forth any
argument or evidence sufficient to overcome the presumption of reasonableness arising from
LLI's purposeful availment of the benefits and protections of Montana law. This is not one of
those "rare cases" in which a defendant who purposefully availed itself of the privilege of
conducting activities in the forum state can establish that asserting jurisdiction over it is
nevertheless unreasonable.
CONCLUSION
This case does not involve an unsuspecting defendant whose product finds its way into
the forum state through and uncertain channels of the "stream of commerce." When LLI sent the
product directly to Montana, it purposefully availed itself of the benefits and protections of
Montana law and therefore should reasonably have anticipated being required to appear in court
in this state. LLI's motion to dismiss should be denied.
1
In addition, Morrises claim an amount less than the amount required to invoke feder.al diversity jurisdiction in
federal court. The complaint requests damages in an amount "that does not exceed $74,999." (Comp!., at l l ). The
amount in controversy required for diversity jurisdiction is $75,000. 28 U.S.C. § 1332.
Morris v. Lumber Liquidators, Inc.
Page 10
•
•
NOW THEREFORE IT IS HEREBY ORDERED as follows:
1. LLI's motion to dismiss is denied.
2. The Clerk, of Court will please file this order and distribute a copy to the parties.
Dated: Ju!Jl, 2016
/
I
_
rJ.bt1
.
I -. J
~{fltl...--
L
c : Brian J. Miller
Gary L. Walton
Morris v. Lumber Liquidators, Inc.
Page 11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?