State Farm Fire & Casualty Company et al v. Swizz Style, Inc.

Filing 54

OPINION & ORDER re: 42 MOTION to Dismiss for Lack of Jurisdiction , filed by Stadler Form Aktiengesellschaft. Third-Party Defendant's motion to dismiss for lack of personal jurisdiction is DENIED. The Clerk of Court is respectf ully directed to terminate the motion at ECF No. 42. Third-Party Defendant shall file any answer to the Third-Party Complaint on or before April 14, 2017. The parties are directed to inform Judge Davison of this Court's ruling and to revise their case management plan accordingly. So Ordered., (Stadler Form Aktiengesellschaft answer due 4/14/2017.) (Signed by Judge Nelson Stephen Roman on 3/23/17) (yv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
STATE FARM FIRE & CASUALTY COMPANY

alslo DAVID HAWKER,
Plaintiff,
-againstSWIZZ STYLE, INC.,
Defendant.

No. 15 Civ. 9432 (NSR)
OPINION & ORDER

SWIZZ STYLE, INC.,
Third-Pmty Plaintiff,
-againstSTADLER FORM AKTIENGESELLSCHAFT,
Third-Party Defendant.

NELSON S. ROMAN, United States District Judge
An air purifier designed overseas by a Swiss corporation caught fire and caused damage
to a home located in Bedford Hills, NY. The insurance company covering the home brought suit
against the U.S. distributor of the air purifier claiming design defects caused the fire. The
distributer counter-sued the foreign manufacturer. The foreign third-party defendant now seeks
to dismiss the third-party complaint for lack of personal jurisdiction. Despite recent Supreme
Comt cases restricting the exercise of personal jurisdiction over foreign defendants, the
manufacturer in this case has sufficient contacts with New York to establish specific jurisdiction.

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For the following reasons, the motion to dismiss is DENIED.
BACKGROUND
For the purposes of determining whether personal jurisdiction exists over the third-party
defendant, the relevant facts taken from the motion papers are as follows. 1
I.

Facts Alleged in the Underlying Action
In mid-2012, David Hawker, a resident of Bedford Hills, New York, came to own a

“Viktor” air purifier when it was “drop-shipped” to him via “the gilt.com website” by Swizz
Style, Inc. (Answer ¶ 8, ECF No. 11.) On June 26, 2014, the air purifier caught fire at Mr.
Hawker’s property in Bedford Hills causing damage to his home and personal property. (Notice
of Removal, Ex. 1 (Verified Compl.) ¶¶ 10, 12.) Fortunately, Mr. Hawker had an insurance
policy issued by State Farm Fire & Casualty Co. (“State Farm”) covering the property and
personal items contained therein. (Id. ¶ 8.)
After the fire, State Farm exercised its rights under the policy and, as subrogor, sued
Swizz Style on behalf of Hawker, as subrogee, alleging Swizz Style’s negligence led to the
defective air purifier catching fire and causing property damage in the amount of $267,141.47.
(Id. ¶¶ 3, 14, 20.) State Farm alleged that Swizz Style “designed, manufactured, built, tested,
distributed, delivered, sold, repaired, serviced, and/or inspected” the air purifier and “sold and
distributed [the] air purifier to wholesale and retail establishments for its sale and distribution in
the State of New York.” (Id. ¶¶ 10-11.)
Swizz Style responded to the allegations by admitting that “it sold the [] air purifier [at
issue] before June 26, 2014” and further explaining that “it sells the V[iktor] air purifier in the

1

The motion was fully briefed as of August 30, 2016. (See Mem. in Supp. of Mot. (“Stadler Mem.”), ECF
No. 46; Aff. Thomas Becker in Supp. of Mot. (“Becker Aff.”), ECF No. 45; Mem. in Opp’n of Mot. (“Swizz
Opp’n”), ECF No. 48; Decl. Juerg Baenziger in Opp’n to Mot. (“Baenziger Decl.”), ECF No. 49; Reply Mem. in
Supp. of Mot. (“Stadler Reply”), ECF No. 50.)

2

United States” but “purchased and continues to purchase the [] air purifiers it sells from Stadler
Form Aktiengesellschaft” (“Stadler Form”), which is located in Switzerland. (Answer ¶ 5.)
Swizz Style additionally denied that the air purifier was defective and denied responsibility for
whatever acts led to Hawker’s damages. (Id. ¶¶ 21-22.) Rather, Swizz Style alleged it would be
entitled to indemnification from Stadler Form, the party “solely responsible for defectively
designing, manufactured, building, testing, distributing, delivering, selling, repairing, servicing
or inspecting the air purifier in all relevant respects[.]” (Third Party Compl. ¶¶ 14, 17.)
II.

The Relationship Between Distributor Swizz Style, Manufacturer Stadler Form, and
New York
Stadler Form was organized under the laws of Switzerland starting in 1998 and operates

out of Lug, Switzerland. (Becker Aff. ¶¶ 3, 4.) Stadler Form has never been incorporated in
New York, has never maintained its principal place of business or an office in New York, has
never maintained any employees or bank accounts in New York, has never been registered to do
business or had a registered agent for service of process in New York, has never owned or leased
any property in New York or had a New York phone number, and has never paid any taxes to
New York. (Id. ¶¶ 6-14, 17.) Stadler Form alleges that it maintains no assets in New York, and
that no employee of Stadler Form travelled to New York on its behalf in connection to the
matters at issue in this lawsuit. (Id. ¶¶ 15, 16.)
Instead, Swizz Style, an Ohio-based corporation, purchased Viktor air purifiers from
Stadler Form pursuant to a written distribution agreement. (Third Party Compl. ¶¶ 6, 7, 13.)
Swizz Style has been the exclusive U.S. distributor of Stadler Form’s goods since 2006.
(Baenziger Decl. ¶ 5.) The purifiers are shipped “free-on-board” and title is transferred between
Stadler Form and Swizz Style in China. (Becker Aff. ¶ 22.) Stadler Form thus asserts that the

3

allegedly negligent actions connected to the manufacturing of the air purifier would have taken
place in either Switzerland or China. (Id. ¶ 19.)
Stadler Form asserts that it does not directly sell, distribute, or transfer the Viktor air
purifiers to citizens of New York. (Becker Aff. ¶¶ 20-21.) Moreover, Stadler Form alleges it
“did not have any input and/or control regarding where Swiss Style would ultimately sell the []
air purifiers in the United States.” (Id. ¶ 23.) Instead, it was Swizz Style that had the
“responsib[ility] for selling and delivering the [] air purifiers to end users and retailers in the
United States.” (Id. ¶ 24.) Swizz Style, however, alleges that Stadler Form—which “derives
most of its revenue from international commerce”—chose to “target[] New York as a market for
its fashionable, stylish products, and was keenly aware of the significant sales of [its products]”
in New York. (Baenziger Decl. ¶¶ 2, 8.)
In fact, Swizz Style and Stadler Form engaged in “many meetings in 2010 and 2011 in
which [they] discussed [] th[ose] considerations and made New York a target because of them.”
(Id. ¶ 10.) Swizz Style alleges that focusing on New York paid off, as Stadler Form knew: in
2012, “monthly meetings by Skype” took place between the two where Swizz Style “advise[d]
Stadler Form’s personnel, including its principal Martin Stadler, on significant sales and its
significant retailer/resellers buyers, especially those in New York.” (Id. ¶ 12.) Swiss Style
alleges that at the time Mr. Hawker purchased his Viktor air purifier, New York made up 34% of
Swiss Style’s sales of Stadler Form products. (Id. ¶ 14.) As to Swizz Style’s knowledge of
Stadler Form’s main source of revenue, the principal of Swizz Style—based on his “long
association with Stadler Form and its principals before and after December 2011” 2—asserts that

2

Swizz Style also alleges that it and Stadler Form were “affiliated corporations” up until the end of 2011,
when Mr. Baenziger sold his shares in one company for exclusive control of Swizz Style and the corporate
relationship changed. (Baenziger Decl. ¶¶ 4, 6.) The full extent of the agreements between the corporations and
their structures are unclear.

4

Stadler Form “derives most of its substantial revenues from international commerce.” (Id. ¶ 19;
see also Stadler Reply at 6 (undisputed).)
Regarding the fire at issue in the direct action, Swizz Style alleges that Stadler Form
provided “retrofitting kits” to “correct[] a potential overheating condition in the Viktor air
purifiers sold . . . into New York” after a government recall of the purifiers in Europe between
2011 and 2012. (Id. ¶ 3.) Moreover, Swizz Style alleges Stadler Form “encouraged” it to delete
any records of the reworking of the units, which it contends demonstrates Stadler Form “knew or
should have known that it could be called to account for a fire in New York.” (Id.) The email
excerpt cited by Swizz Style indicates that Thomas Becker, Production and Quality Control
Manager for Stadler Form, suggested Swizz Style could “delete the message on [its] homepage,”
presumably regarding the overheating issue, since Swizz Style was “able to contact nearly all [of
its] customers,” particularly since “it was not a require[ment] from the government that [Swizz
Style] do [the] rework[.]” (Id. ¶ 17; see also Becker Aff. ¶ 2 (noting Mr. Becker’s history with
the company).)
III.

Procedural History
On October 22, 2015, Plaintiff State Farm filed suit against Defendant Swizz Style in

New York state court. (Notice of Removal ¶ 1, ECF No. 1.) On December 1, 2015, Swizz Style
removed the state court action to this Court on the basis of diversity jurisdiction. (Notice of
Removal ¶¶ 2-3, 5.) 3 Swizz Style then filed a third-party complaint against Stadler Form on
January 29, 2016. (ECF No. 17.) Stadler Form has moved to dismiss that complaint on the basis

3

On the basis of the pleadings, affidavits, and declarations submitted, the parties are entirely diverse and
the amount in controversy is greater than $75,000. See 28 U.S.C. § 1332. State Farm is an Illinois corporation
having its principal place of business in Bloomington, Illinois; Mr. Hawker is a citizen of the State of New York
residing in Bedford Hills, New York; Swizz Style is an Ohio corporation having its principal place of business in
Dover, Ohio; and Stadler Form is a Swiss corporation having its principal place of business in Zug, Switzerland.
(Third Party Compl., ¶¶ 4-7; Becker Aff. ¶¶ 3, 4; Baenziger Decl. ¶ 5.)

5

that the Court cannot assert personal jurisdiction over the Swiss company. (ECF No. 42.) Swizz
Style has requested the opportunity to take jurisdictional discovery in the event the Court finds
Swizz Style has failed to establish jurisdiction. (See Swizz Opp’n at 6, 17; Baenziger Decl. ¶ 24
(describing areas where discovery may be needed).)
STANDARD ON A MOTION TO DISMISS
FOR LACK OF PERSONAL JURISDICTION
“In order to survive a [Rule 12(b)(2)] motion to dismiss for lack of personal jurisdiction,
a plaintiff must make a prima facie showing that jurisdiction exists.” Licci ex rel. Licci v.
Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013) (quoting Thomas v. Ashcroft,
470 F.3d 491, 495 (2d Cir. 2006)). “Such a showing entails making ‘legally sufficient
allegations of jurisdiction,’ including ‘an averment of facts that, if credited[,] would suffice to
establish jurisdiction over the defendant.’” Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d
30, 35 (2d Cir. 2010) (alteration in original) (citation omitted). Although the “plaintiff bears the
ultimate burden of establishing jurisdiction over the defendant by a preponderance of evidence,”
Waldman v. Palestine Liberation Org., 835 F.3d 317, 334 (2d Cir. 2016) (quoting Koehler v.
Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir. 1996)), the Court will “construe the pleadings
and any supporting materials in the light most favorable to the plaintiff[]” when considering
whether such a showing has been made. Licci, 732 F.3d at 167 (citing Chloé v. Queen Bee of
Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010)).
DISCUSSION
The Court must decide whether Swizz Style, an Ohio corporation, can assert personal
jurisdiction over Stadler Form, a Swiss corporation, in this suit brought under diversity
jurisdiction in a federal court located in New York: the forum where the injury is alleged to have
occurred. “In diversity cases . . ., a district court looks to the law of the state in which it sits to
6

determine whether it has personal jurisdiction over foreign defendants.” Jonas v. Estate of
Leven, 116 F. Supp. 3d 314, 323 (S.D.N.Y. 2015) (citing Int’l Shoe Co. v. State of Wash., Office
of Unemployment Comp. & Placement, 326 U.S. 310 (1945)); see also Brown v. Lockheed
Martin Corp., 814 F.3d 619, 624 (2d Cir. 2016) (quoting Arrowsmith v. United Press Int’l, 320
F.2d 219, 223 (2d Cir. 1963) (en banc) (Friendly, J.)) (“[T]he amenability of a foreign
corporation to suit in a federal court in a diversity action is determined in accordance with the
law of the state where the court sits, with ‘federal law’ entering the picture only for the purpose
of deciding whether a state’s assertion of jurisdiction contravenes a constitutional guarantee.”).
After “determin[ing] whether the defendant is subject to jurisdiction under the law of the forum
state—here, New York”—a court must consider “whether the exercise of personal jurisdiction
over the defendant comports with the Due Process Clause of the United States Constitution.”
Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224 (2d Cir. 2014) (citing Licci,
732 F.3d at 168).
“[A] court may exercise two types of personal jurisdiction over a corporate defendant
properly served with process[:] . . . specific (also called ‘case-linked’) jurisdiction and general
(or ‘all-purpose’) jurisdiction.” Brown, 814 F.3d at 624. “Specific jurisdiction is available when
the cause of action sued upon arises out of the defendant’s activities in a state.” Id. In New
York, there are four varieties of in-state activities that can subject a foreign defendant to
jurisdiction pursuant to New York’s “long-arm” statute, N.Y. C.P.L.R. § 302(a). See Licci, 732
F.3d at 168. “General jurisdiction, in contrast, permits a court to adjudicate any cause of action
against the corporate defendant, wherever arising, and whoever the plaintiff.” Brown, 814 F.3d
at 624. New York permits the exercise of general jurisdiction, pursuant to N.Y. C.P.L.R. § 301,
“where a company ‘has engaged in such a continuous and systematic course of “doing business”

7

[in New York] that a finding of its “presence” [in New York] is warranted.’” Sonera, 750 F.3d
at 224 (quoting Landoil Res. Corp. v. Alexander & Alexander Servs., 77 N.Y.2d 28, 33 (1990)).
Third-Party Plaintiff Swizz Style does not assert that Third-Party Defendant Stadler Form
can be subjected to general jurisdiction. (Swizz Opp’n at 3.) 4 Therefore, the Court narrows its
focus to determine 1) whether Stadler Form is subject to specific jurisdiction pursuant to N.Y.
C.P.L.R. § 302(a), and 2) whether exercising personal jurisdiction over Stadler Form would
comport with due process.
I.

Specific Jurisdiction under New York law
Under New York’s long-arm statute, a court has specific jurisdiction over a foreign

defendant that: 1) “transacts any business within the state or contracts anywhere to supply goods
or services in the state,” 2) “commits a tortious act within the state,” 3) “commits a tortious act
[outside] the state causing injury to person or property within the state,” or 4) “owns, uses or
possesses any real property situated within the state.” N.Y. C.P.L.R. § 302(a). If the alleged
tortious act occurred outside of New York but caused injury inside New York as in this case,
then there are additional prerequisites to asserting jurisdiction over the foreign defendant. The
defendant must either a) “regularly do[] or solicit[] business” in New York, b) “engage[] in any
other persistent course of conduct” in New York, c) “derive[] substantial revenue from goods
used or consumed or services rendered” in New York, or d) “derive[] substantial revenue from
interstate or international commerce” and “expect[] or should reasonably expect the act
[occurring outside New York] to have consequences” in New York. N.Y. C.P.L.R. § 302(a)(3).

4

Given Stadler Form’s generally lacking physical presence in the state, and the separation between itself
and its U.S. distributor, Swizz Style, the Court additionally finds it unlikely that Stadler Form’s relationship to New
York is the “exceptional case” rendering it “at home” in this forum. See Daimler AG v. Bauman, 134 S. Ct. 746,
761 n.19 (2014); see also Brown, 814 F.3d at 629 (“mere contacts, no matter how ‘systematic and continuous,’ are
extraordinarily unlikely to add up to an ‘exceptional case’”); Sonera, 750 F.3d at 226 (even if various contacts with
New York were imputed to foreign corporation at issue, it would not be “at home”).

8

The third basis for asserting specific jurisdiction is relevant to the instant dispute
involving Stadler Form, as the alleged defective design of the air purifier would have taken place
by Stadler Form in Switzerland or China, and the result of the defective design was felt in New
York when the purifier caught fire. Swizz Style relies on Kernan v. Kurz–Hastings, Inc., 175
F.3d 236 (2d Cir. 1999), to establish personal jurisdiction over Stadler Form pursuant to the final
avenue available under § 302(a)(3)—substantial revenue derived from international commerce
coupled with a reasonable expectation that the corporations actions outside of the state would
have consequences in the state. See N.Y. C.P.L.R. § 302(a)(3)(ii). Under this portion of the
long-arm statute, “‘[t]he test of whether a defendant expects or should reasonably expect his act
to have consequences within the State is an objective rather than subjective one,’” and “the
simple likelihood or foreseeability ‘that a defendant’s product will find its way into New York
does not satisfy this element[.]’” Kernan, 175 F.3d at 241 (quoting Allen v. Auto Specialties
Mfg. Co., 45 A.D.2d 331, 333 (3d Dep’t 1974), and In re DES Cases, 789 F. Supp. 552, 570-71
(E.D.N.Y. 1992)). 5
In Kernan, the Second Circuit determined that the court had personal jurisdiction over a
Japanese manufacturer under § 302(a)(3)(ii) even though the company operated through a
Pennsylvania distributor and did not directly serve consumers in New York. Id. at 242. The
Circuit emphasized the exclusivity of the sales agreement between the manufacturer and the
distributor, which sold the allegedly defective product “hot stamping press” at issue in the case,
and the manufacturer’s “general knowledge” that the distributor would resell machines in
Pennsylvania and throughout the United States. Id. Moreover, the exclusive sales agreement

5

“There is some uncertainty as to whether courts should require ‘purposeful availment’ as part of the
foreseeability element.” Levans v. Delta Airlines, Inc., 988 F. Supp. 2d 330, 339 (E.D.N.Y. 2013) (finding
§ 302(a)(3)(ii) not met after incorporating the minimum contacts due process analysis into the long-arm statute).
This Court opts to keep the two analyses separate absent a clear indication from the New York state courts.

9

permitted the sale of the Japanese manufacturer’s product throughout the world, though it did not
specifically direct the Pennsylvania sales agent to target the New York market. Id.
Nevertheless, the Kernan court was satisfied that the manufacturer “did indeed attempt to serve
the New York market, even if it did so indirectly,” such that the manufacturer might have
expected its actions to have consequences in New York. Id.
The court in Kernan analyzed the differences between Schaadt v. T.W. Kutter, Inc., 169
A.D.2d 969, 970 (3d Dep’t 1991), where the Third Department of New York’s Appellate
Division concluded a German manufacturer of a meat packing machine could not be subjected to
New York’s long-arm statute, and Kappas v. T.W. Kutter, Inc., 192 A.D.2d 402, 402 (1st Dep’t
1993), where the First Department sought a more complete record regarding the same
manufacturer’s contacts with New York. Notably, the Kappas court looked at the distributor’s
servicing of machines in New York and the manufacturer’s warranting of the machines—
considering the nature of the contractual relationship between the parties and the imputation of
contacts on an agency basis. Ultimately, the Kernan court found the potential for “the exchange
of information relevant to product development” to be a key factor tipping towards the Kappas
side of the scale and away from Schaadt, meaning that the manufacturer’s potential for
awareness of profitable markets for the machines militated in favor of exercising jurisdiction
over the manufacturer. Stadler Form largely ignores Kernan except to question its continued
viability in passing, which is discussed further below, and to strenuously argue that this case is
more like Schaadt. (See Stadler Reply at 12; see infra Section II (due process analysis).)
Until the Second Circuit directly addresses Kernan, it controls this Court’s analysis of
jurisdiction pursuant to N.Y. C.P.L.R. § 302(a)(ii)—which may be broader than the confines of
due process—and its applicable easily leads to the same result with regard to New York’s long-

10

arm. See, e.g., Ikeda v. J. Sisters 57, Inc., No. 14 Civ. 3570 (ER), 2015 WL 4096255, at *5, *8
(S.D.N.Y. July 6, 2015) (personal jurisdiction was appropriate under New York law but would
not satisfy the demands of due process). Based on the allegations presented and Swizz Style’s
supporting declaration, Swizz Style has made a prima facie showing that Stadler Form derives
substantial revenue from international commerce 6 and should reasonably have expected the
potential design flaw associated with the air purifier to have ramifications in the United States
generally and New York specifically. Indeed, Stadler Form is alleged to have participated in
monthly meetings where New York was target based on design and market considerations.
Therefore, the Court must now determine whether exercising jurisdiction over Stadler
Form pursuant to New York’s long-arm statute would comport with due process.
II.

Due Process Considerations
The Supreme Court has reshaped the contours of personal jurisdiction over the course of

this decade. Through its decisions in J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (2011),
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), Daimler AG v.
Bauman, 134 S. Ct. 746 (2014), and Walden v. Fiore, 134 S. Ct. 1115 (2014), previous
conceptions of where a corporation is “at home” or what activities create sufficient ties to a
forum for the purposes of establishing jurisdiction over a corporation have been eschewed in
favor of more restrictive formulations.
Goodyear and Daimler reduced the exercise of general jurisdiction in favor of specific
jurisdiction. Goodyear, 564 U.S. at 924 (“the paradigm forum for the exercise of general
jurisdiction . . . for a corporation . . . [is] one in which the corporation is fairly regarded as at

6

Stadler Form does not dispute that it derives substantial revenue from international commerce. (Stadler
Reply at 6.) Indeed, Swizz Style’s revenues from New York specifically total approximately $330,000 for the year
the air purifier was sold, $530,000 for the year when it caught fire, and $440,000 at the time the action was
commenced. (Baenziger Decl. ¶ 14.)

11

home”) (citation omitted); Daimler, 134 S. Ct. at 761 (“the inquiry under Goodyear is not
whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous
and systematic,’ it is whether that corporation’s ‘affiliations with the State are so “continuous
and systematic” as to render [it] essentially at home in the forum State’”) (citation omitted and
emphasis added); id. at 761 n.19 (“We do not foreclose the possibility that in an exceptional
case . . . a corporation’s operations in a forum other than its formal place of incorporation or
principal place of business may be so substantial and of such a nature as to render the
corporation at home in that State”).
But specific jurisdiction has receded as well under J. McIntyre and Walden. See J.
McIntyre, 564 U.S. at 888-89 (Breyer, J., concurring) (“a single sale of a product in a State does
not constitute an adequate basis for asserting jurisdiction over an out-of-state defendant, even if
that defendant places his goods in the stream of commerce, fully aware (and hoping) that such a
sale will take place”); id. at 882 (Kennedy, J., plurality) (“The defendant’s transmission of goods
permits the exercise of jurisdiction only where the defendant can be said to have targeted the
forum”); Walden, 134 S. Ct. at 1123 (“Due process requires that a defendant be haled into court
in a forum State based on his own affiliation with the State, not based on the ‘random, fortuitous,
or attenuated’ contacts he makes by interacting with other persons affiliated with the State”). 7
Against this revised backdrop, in order to determine “whether a forum State may assert
specific jurisdiction over a nonresident defendant,” the Court “focuses on the relationship among
7
These decisions have serious ramifications for American citizens attempting to sue multinational
corporations in American courts. See J. McIntyre, 564 U.S. at 894 (Ginsburg, J., dissenting) (“the splintered
majority today ‘turn[s] the clock back to the days before modern long-arm statutes when a manufacturer, to avoid
being haled into court where a user is injured, need only Pilate-like wash its hands of a product by having
independent distributors market it.’”) (citation omitted); Daimler, 134 S. Ct. at 772 (Sotomayor, J., concurring) (“the
majority’s approach unduly curtails the States’ sovereign authority to adjudicate disputes against corporate
defendants who have engaged in continuous and substantial business operations within their boundaries”); see also
Brown, 814 F.3d at 627 (“Offsetting the apparent harshness of [the Daimler decision], the Court explained its
expectation that its ruling, while restrictive of general jurisdiction, still left plaintiffs with an adjudicatory forum by
recourse to specific jurisdiction of courts in states bearing a relationship to the cause of action”).

12

the defendant, the forum, and the litigation.” Waldman, 835 F.3d at 335. “[T]he assertion of
jurisdiction [must also] ‘comport[] with ‘traditional notions of fair play and substantial justice’—
that is, [] it [must be] reasonable under the circumstances of [this] case.” Kernan, 175 F.3d
at 244 (citations omitted).
a. Forum Contacts
“[T]he defendant’s suit-related conduct must create a substantial connection with the
forum State” in order for the exercise of jurisdiction to be consistent with due process.
Waldman, 835 F.3d at 335 (quoting Walden, 134 S. Ct. at 1121). When considering the
“minimum contacts” that must be present between the defendant and the forum, the “analysis
looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with
persons who reside there.” Id. (quoting Walden, 134 S. Ct. at 1122). After J. McIntyre, “a local
plaintiff injured by the activity of a manufacturer seeking to exploit a multistate or global
market” cannot bring suit against the foreign manufacture in the “courts of the place where the
product was sold and caused injury” without more: “‘regular [] flow’ or ‘regular course’ of sales
in [the state]” or a “special state-related design, advertising, advice, marketing, or [something]
else.” J. McIntyre, 564 U.S. at 910-11 (Ginsburg, J., dissenting) (citing amongst other cases
Kernan v. Kurtz-Hastings, Inc.); id. at 889 (Breyer, J., concurring) (controlling opinion).
Thus, despite the Kernan court’s determination that exercise of personal jurisdiction was
warranted where the manufacturer “did indeed attempt to [indirectly] serve the New York
market,” the revised strictures of due process now require “something more.” Kernan, 175 F.3d
at 242; J. McIntyre, 564 U.S. at 889. Compare, e.g., OneBeacon Ins. Grp. v. Tylo AB, 731 F.
Supp. 2d 250, 260 (D. Conn. 2010) (exercising specific jurisdiction over a foreign manufacturer
that “had no specific knowledge of what would become of its products once it provided them to

13

[its U.S. distributor], other than the general knowledge that [the distributor] would resell them
somewhere in the northeastern United States”), with Oticon, Inc. v. Sebotek Hearing Sys., LLC,
865 F. Supp. 2d 501, 513 (D.N.J. 2011) (“there is no doubt that [J. McIntyre] stands for the
proposition that targeting the national market is not enough to impute jurisdiction to all the
forum States [and] . . . overruled the line of cases . . . which held to the contrary”). Courts in this
Circuit have also recognized that Kernan may be in conflict with J. McIntyre. See Tanner v.
Heath Graphics LLC, No. 15 Civ. 0098 (LEK) (CFH), 2017 WL 922013, at *7 (N.D.N.Y. Mar.
8, 2017) (“Kernan’s holding on [due process] conflicts with Justice Breyer’s concurrence in [J.
McIntyre] and is no longer good law.”); Ikeda, 2015 WL 4096255, at *9 (“The Court notes,
however, that Kernan was decided before the Supreme Court issued its opinion in [J. McIntyre]
and that the Second Circuit has not indicated what, if any, effect [that case] has on Kernan.”).
Thus, Swizz Style’s reliance on Kernan and similar cases is incomplete with regard to the due
process portion of the specific jurisdiction analysis.
The Court in Daimler—which focused on general rather than specific jurisdiction—
provided a brief overview of situations where a finding of specific jurisdiction would ostensibly
still comport with due process, listing forum specific connections such as: “designing the product
for the market in the forum State, advertising in the forum State, establishing channels for
providing regular advice to customers in the forum State, or marketing the product through a
distributor who has agreed to serve as the sales agent in the forum State,” “efforts of the
manufacturer or distributor to serve, directly or indirectly, the market for its product in other
States,” having its largest distribution of its product in the forum State, or the “continuous[] and
deliberate[] exploit[ation]” of the forum State’s market. Daimler, 134 S. Ct. at 755 n.7 (quoting
Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102, 112 (1987)

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(opinion of O’Connor, J.), World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980), Calder v. Jones, 465 U.S. 783, 789-90 (1984), and Keeton v. Hustler Magazine, Inc., 465
U.S. 770, 780-81 (1984)).
Of the courts in this Circuit that have considered Kernan-like situations post-J. McIntyre,
only one has found that the exercise of personal jurisdiction over the foreign defendant would
not offend due process. In UTC Fire & Sec. Americas Corp. v. NCS Power, Inc., the “something
more” was present: the foreign manufacturer had to “approve” any orders it received from its
distributor. 844 F. Supp. 2d 366, 369 (S.D.N.Y. 2012). That approval requirement led the court
to determine that the manufacturer had “presumptive knowledge” over the “hundreds of
thousands of batteries that were sold to [the injured plaintiff]” as a result of the distributor’s
solicitation of business and actual sales within New York. Id. at 376-77 (these factors
demonstrated “a strong[er] inference of an expectation of true national distribution . . . than that
which could be drawn from the J. McIntyre defendant’s sale of [a] . . . limited number of units to
an independent U.S. distributor”).
In the remaining examples, where only an exclusive distributorship agreement existed
between the distributor and manufacturer and allegations of forum-specific contacts were
lacking, courts have understandably found that they cannot constitutionally exercise personal
jurisdiction over the manufacturer. Tanner, 2017 WL 922013, at *7 (“no indication that [the
manufacturer] engaged in any New York-focused activities” where there was “only one
documented sale [made] to New York [and] that sale took place under a nationwide distribution
agreement that did not explicitly target New York”); Ikeda, 2015 WL 4096255, at *8 (no
allegations present “that demonstrate [the manufacturer’s] specific effort to sell in New York,
such as ‘special state-related design, advertising, advice, marketing, or anything else.’”);

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Davidson v. Honeywell Int’l Inc., No. 14 Civ. 3886 (LGS), 2015 WL 1399891, at *3 (S.D.N.Y.
Mar. 26, 2015) (manufacturer’s “alleged negligence in the design, manufacture and assembly of
[a part] on the aircraft . . . took place in Maryland,” the manufacturer “never manufactured or
sold [the part] to customers in New York,” and the plaintiffs did not show “any action
purposefully directed toward New York”); Boyce v. Cycle Spectrum, Inc., 303 F.R.D. 182, 186
(E.D.N.Y. 2014) (no allegations of “any arrangements with companies incorporated or doing
business in New York to sell bicycle parts or bicycles containing [the manufacturer’s] parts in
New York,” and the manufacturer “did not target the New York market”); Dejana v. Marine
Tech., Inc., No. 10 Civ. 4029 (JS) (WDW), 2011 WL 4530012, at *6 (E.D.N.Y. Sept. 26, 2011)
(manufacturer “d[id] not have representatives in New York, [] ha[d] not delivered boats to New
York, and [] d[id] not solicit sales in New York”).
The thoughtful analysis in Ikeda v. J. Sisters 57, Inc. serves as a useful comparator, since
the action involved a similar scenario, and the court determined that although New York’s longarm statute was satisfied, the allegations in that case were insufficient to allow it to exercise
jurisdiction over a foreign defendant in accordance with the bounds of due process. 2015 WL
4096255, at *5, *8. In Ikeda, a consumer was injured by a hair care product in New York. Id.
at *1. The product’s sole U.S. distributor was based in Florida, and the product’s manufacturer
was based in the United Kingdom. Id. at *2. There, the plaintiffs failed to allege “that any
additional products manufactured by [the foreign manufacturer] reached the New York market,
let alone ventured to estimate the volume of [its] goods that make their way into the state.” Id.
at *8. “Nor ha[d] they alleged any other facts that demonstrate[d] [the manufacturer’s] specific
effort to sell in New York, such as ‘special state-related design, advertising, advice, marketing,
or anything else.’” Id. Thus, the Court had no choice but to find the plaintiffs’ jurisdictional

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allegations lacking. Id. at *8-10 (providing the plaintiffs with the opportunity to conduct
jurisdictional discovery prior to dismissing the complaint).
In contrast to Ikeda, Swizz Style has alleged that a significant volume of its sales—as the
exclusive distributor in the United States—were directed to New York, that Stadler Form was
aware and “targeted” New York specifically, and that Stadler Form might reasonably have
suspected it could be called upon to answer for any fires related to the Viktor air purifiers in light
of the retrofitting kits it provided to Swizz Style to correct the overheating problem. On the basis
of these allegations, Stadler Form has even greater knowledge of New York’s importance in
terms of product sales than the manufacturer in UTC Fire—and the items missing from Ikeda are
present. See also Darrow v. Deutschland, 119 A.D.3d 1142, 1144-45 (3d Dep’t 2014) (German
corporation’s “awareness” of the regional distribution network by which its products were
distributed to New York provided minimum contacts “compatible with federal due process
standards”). Therefore, Swizz Style has alleged Stadler Form had the minimum contacts with
New York necessary to support the exercise of specific jurisdiction.
b. Reasonableness
Because Swizz Style has established the necessary minimum contacts between Stadler
Form and New York, the Court must decide if the exercise of personal jurisdiction over the
Swiss corporation would be reasonable. Kernan, 175 F.3d at 244. The burden now shifts to
Stadler Form to proffer a compelling reason against the exercise of jurisdiction. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985) (“where a defendant who purposefully has
directed his activities at forum residents seeks to defeat jurisdiction, he must present a
compelling case that the presence of some other considerations would render jurisdiction
unreasonable”). The reasonableness of jurisdiction is inversely proportional to the minimum

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contacts present. See id. (“[reasonableness] considerations sometimes serve to establish the
reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise
be required”).
There are five “reasonableness” factors that inform this determination:
(1) the burden that the exercise of jurisdiction will impose on the
defendant; (2) the interests of the forum state in adjudicating the
case; (3) the plaintiff’s interest in obtaining convenient and
effective relief; (4) the interstate judicial system’s interest in
obtaining the most efficient resolution of the controversy; and
(5) the shared interest of the states in furthering social substantive
policies.
Kernan, 175 F.3d at 244. In this modern era, the first prong is largely disregarded with respect to
solvent corporate defendants. Id. at 244 (“the conveniences of modern communication and
transportation ease what would have been a serious burden only a few decades ago”). And it is
hard to imagine that a corporation with distributors in every country across the globe would be
heavily burdened by travel or translation costs.
As for New York’s interest in adjudicating this case, Stadler Form argues an action for
indemnification is largely unimportant to the State. See Asahi, 480 U.S. at 114-15 (“The dispute
between [the Taiwanese corporation] and [the Japanese corporation] [was] primarily about
indemnification rather than [enforcing] safety standards”). And it is true that Swizz Style’s
foreign corporate status weighs against New York’s interest in this matter. Id. at 114. But the
real question is whether New York is concerned with or interested in providing a pathway to full
recovery for the damages caused by the allegedly defectively designed product.
The two phases of the action cannot be artificially broken apart. A citizen of New York
was allegedly harmed by tortious conduct. For his insurer to recoup the costs of the damages, a
solvent liable party must be held accountable. If the distributor was held liable without efficient
recourse against the manufacturer of the item, then in many scenarios the distributer would
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become effectively judgment proof—particularly in costly products liability litigation. New
York would surely not welcome such a result. And the same reasoning demonstrates Swizz
Style’s interest in having Stadler Form in the litigation.
As to the interstate judicial systems’ interest in efficiency or the shared interest between
New York and Switzerland in furthering particular policies, neither party has addressed the
issues in depth with regard to any conflicts between New York and Switzerland. 8 The Court
disagrees that New York’s general interest in protecting its citizens is outweighed by Stadler
Form’s conflicting assertion that it did not target this forum. Swizz Style has alleged monthly
meetings updating Stadler Form as to the product’s key markets—including New York.
Moreover, the Court finds that the underlying product liability determinations will be far more
efficient, and that consumers in New York that may be at risk from potentially faulty products
will be more protected, by keeping Stadler Form in the case.
As Stadler Form has failed to make a compelling demonstration to the contrary, the
reasonableness factors weigh in favor of exercising jurisdiction over Stadler Form in this action.

8

Stadler Form and Swizz Style disagree as to the import of one provision contained in one of the
agreements between the parties, though Stadler Form largely concedes it is inapplicable to the instant dispute, with
which the Court agrees. (See Stadler Mot. at 17.) The agreement cited by Stadler Form restructured the corporate
relationship between it and Swizz Style, and acknowledged that Swizz Style would continue to be the exclusive
distributor of Stadler Form products in the United States. (See Decl. Thomas Pender in Supp. of Mot., Ex. 1, ECF
No. 39.) The specific provision at issue states: “All disputes in connection with this agreement will be negotiated
without recourse of the Legal System and decided by a judge. Every legal recourse is excluded.” (Id. at ¶ 16.)
Undoubtedly, whether due to translation or drafting errors, the provisions are unclear and internally
inconsistent. The provision indicates that all “legal recourse is excluded.” In accordance with that exclusion, “[a]ll
disputes in connection with th[e] agreement” were required to be “negotiated without recourse [to] the Legal
System[.]” Yet disputes were also to be “decided by a judge.” The inconsistencies cannot be reconciled.
In any event, drawing all inferences in favor of Swizz Style, the Court finds that liability for design defects
causing damage to a consumer’s property is unrelated to the scope of this particular agreement and construes the
provision narrowly as relating only to disputes relating to the restructuring of the companies, or to the ongoing
validity of the exclusive distribution agreement between Swizz Style and Stadler Form, but not to secondary matters
such as indemnification under circumstances like those alleged in this case.

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CONCLUSION

For the foregoing reasons, Third-Party Defendant's motion to dismiss for lack of personal
jurisdiction is DENIED. The Clerk of Court is respectfully directed to terminate the motion at
ECF No. 42. Third-Party Defendant shall file any answer to the Third-Party Complaint on or
before April 14, 2017. The parties are directed to inform Judge Davison of this Comt's ruling
and to revise their case management plan accordingly.

Dated:

SO ORDERED:

March23,2017
White Plains, New York

--~--~

~---·--NELSONS. ROMAN
United States District Judge

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