Opinion
IP 97-0750-C-T/G
September 13, 2001
ENTRY ON DEFENDANT'S MOTION TO DISMISS
Though this Entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this Entry will govern the case presently before this court. See, e.g., Trs. of Pension, Welfare, Vacation Fringe Benefits Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority, and therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this Entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
Defendant filed a motion to dismiss based on lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Plaintiff opposes the motion. The court rules as follows.
I. Factual and Procedural Background
This action stems from an accident involving a V-47 Intelinject Press, which was installed at an ENBI facility in Shelbyville, Indiana. Plaintiff, Daniel M. Williams, was injured and lost three of his fingers while operating the press during the course of his job. (Compl. ¶¶ 3-4.) The Press was manufactured by REP International, which sold the press to REP Deutschland, which in turn sold the press to EBNI Netherlands on June 6, 1995. (Def.'s Ex. 2 ¶¶ 7 16.) EBNI shipped the press to its Shelbyville plant where it was installed by REP Corporation on July 12 through 14 of 1995. (Def.'s Ex. 2.)
Williams claims that REP Corporation is a "wholly owned subsidiary," implying that it is owned by REP International. (Pl.'s Resp. at 2, 11.) However, both REP Corporation and REP International are wholly owned subsidiaries of REP, a French corporation. REP International is a French corporation with its principal place of business in Lyon, France. REP Corporation acts as REP International's independent United States distributor and is an Illinois corporation with its principal place of business in Bartlett, Illinois.
On April 11, 1997, Williams filed a complaint against REP Corporation alleging a claim under Indiana's Product Liability Act. On October 27, 1998, Williams amended his complaint to include REP France. (Def.'s Ex. 8.) REP Corporation filed a motion for summary judgment, which was granted on March 15, 2000, because it did not place the press into the stream of commerce. (Def.'s Ex. 7.) REP International now moves to dismiss the Complaint based on lack of personal jurisdiction. Additional facts will be set out as needed in this Entry.
The caption page of the complaint now reads REP France. It is unclear exactly whom Williams intended to sue because his response melds the three corporate entities. However, there is no REP France and REP International is the name of the manufacturer of the press. Because the plaintiff bears the burden of demonstrating that personal jurisdiction exists and Williams did not make clear which REP was his intended defendant, this court will GRANT the Defendant's request to modify the caption and the Clerk is ORDERED to modify the caption to show REP International as the Defendant.
II. Standard for Personal Jurisdiction
When personal jurisdiction is challenged, the plaintiff bears the burden of demonstrating that personal jurisdiction exists. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Any affidavits or other specific evidence offered by the plaintiff must be assumed true for the purposes of determining personal jurisdiction, and any disputed facts are construed in the plaintiff's favor. Id. at 1275; Health Mgmt. Prof'ls, Inc. v. Diversified Bus. Enters., Inc., 882 F. Supp. 795, 797 (S.D.Ind. 1995). However, vague generalizations or conclusory allegations unsupported by any factual assertions will not withstand a motion to dismiss. Cushing v. City of Chicago, 3 F.3d 1156, 1160-61 n. 5 (7th Cir. 1993) (in 12(b)(6) context).
A federal court has personal jurisdiction over the parties in a diversity action only if a court in the state in which the federal court is sitting would have jurisdiction. Nelson by Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983). Therefore, this court will look to Indiana law to determine whether personal jurisdiction exists over REP International. A two-step analysis is required to determine whether an Indiana state court may exercise personal jurisdiction over a nonresident defendant. Anthem Ins. Cos. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1232 (Ind. 2000). The court must first determine whether asserting jurisdiction over a defendant comports with Indiana's long-arm statute, Indiana Trial Rule 4.4(A).
If a basis for personal jurisdiction exists under the long-arm statute, the court must then determine if a defendant's contacts with the forum state satisfy federal due process analysis. Id. Due process requires a defendant to have "certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." RAR, Inc., 107 F.3d at 1277 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). If those contacts are so continuous and systematic in nature that a defendant reasonably could foresee being haled into court for any matter, then general jurisdiction may be asserted over the defendant even when the controversy is not related to those contacts. Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408, 414 n. 9 (1984).
In the absence of continuous and systematic contacts, specific jurisdiction may be exercised over a defendant if the suit arises out of or is related to the defendant's contacts with the forum. Id. at 414 n. 8. In determining whether specific jurisdiction should be asserted over a defendant, the court must consider whether the defendant purposely availed himself of the privilege of conducting activities within the forum State "such that he should reasonably anticipate being haled into court there." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
In other words, the jurisdictional consequences of particular contacts should come as no surprise to a defendant because of the relationship between his own deliberate actions and the substantive legal dispute between the parties.
See RAR, Inc., 107 F.3d 1278; see also Burger King, 471 U.S. at 475 (noting that the contacts cannot be "random, fortuitous, or attenuated . . ., or . . . the unilateral activity of another party or third person") (citations and internal quotations omitted). Even a single contact, whether an act performed within the forum state or merely an act having an effect within the state, may be sufficient to establish specific jurisdiction so long as it creates a substantial connection with the state and the suit is based on that connection. Potential considerations in evaluating whether a connection is substantial or not include: (1) whether the claim arises from the defendant's forum contacts, (2) the overall contacts of the defendant or its agent with the forum state, (3) the foreseeability of being haled into court in that state, (4) who initiated the contacts, and (5) whether the defendant expected or encouraged contacts with the state. Anthem, 730 N.E.2d at 1236.
Once jurisdiction is established, a defendant can defeat personal jurisdiction only by "present[ing] a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King, 471 U.S. at 477. In evaluating the reasonableness and fairness of asserting jurisdiction over the defendant, the court must also consider: the burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial systems interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive policies. Id. at 476-77.
III. Application to the Current Case
Applying the above law to this case, it becomes clear that Indiana does not have personal jurisdiction over REP International.
A. General Personal Jurisdiction
First, as discussed in Anthem Ins. Cos. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1232-33 (Ind. 2000), REP International must fall under Indiana's long-arm statute, Trial Rule 4.4(A). The rule provides in relevant part:
Williams contends that "Indiana's long-arm statute . . . has been universally recognized to extend personal jurisdiction of courts sitting in Indiana . . . to the limits permitted under the Due Process Clause of the Fourteenth Amendment," relying on Indiana Court of Appeals cases. (Pl.'s Resp. at 6 (citations and quotations omitted).) However, Williams has failed to discuss or even mention the effect of recent Indiana Supreme Court jurisprudence, specifically requiring a separate analysis of the Indiana long-arm statute, on this contention. Anthem, 730 N.E.2d at 1232.
Acts Serving as a Basis for Jurisdiction. Any person or organization that is a nonresident of this state, a resident of this state who has left the state, or a person whose residence is unknown, submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or her or his or her agent: (1) doing any business in this state; (2) causing personal injury or property damage by an act or omission done within this state; (3) causing personal injury or property damage in this state by an occurrence, act, or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefit from goods, materials, or services used, consumed, or rendered in this state; (4) having supplied or contracted to supply services rendered or to be rendered or goods or materials furnished or to be furnished in this state; (5) owning, using, or possessing any real property or an interest in real property within this state. . . .
REP International does not fall under any of the categories in Indiana's long-arm statute and therefore, there is no personal jurisdiction over REP International in Indiana. First, REP International is not doing business in Indiana.
Indiana state courts have looked at things such as business trips to Indiana and transactions with Indiana businesses, including law firms, storage companies, and computer companies, to satisfy this requirement. Anthem, 730 N.E.2d at 1239. In this case, REP International has done none of these things and has no business relationships with Indiana. Nor has Williams shown that REP International, as opposed to its sister company REP Corporation, had any business dealings in Indiana. REP International is not licensed to do business in Indiana, has no employees in Indiana, does not pay taxes in Indiana, and does not have an agent for service of process purposes in Indiana. REP International does not advertise or solicit business in Indiana and the equipment in question was not sold to an Indiana company. (Def.'s Ex. 10.) Therefore, REP International does not satisfy the first provision of the long-arm statute.
Williams attempts to assert jurisdiction over REP International by combining its contacts with that of its sister corporation, REP Corporation. REP International is a French corporation, organized under the laws of France with its principal place of business in Lyon, France. (Def.'s Ex. 10.) REP Corporation is an Illinois corporation with its principal place of business in Bartlett, Illinois. (Def.'s Ex. 2.) Both REP International and REP Corporation are subsidiaries of REP. (Def.'s Ex. 10 ¶¶ 2 14.) Courts typically presume that a parent and a subsidiary are separate entities when determining whether a subsidiary has sufficient contacts with a forum state to be subject to suit in that state. Cent. States, Southeast Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 943-44 (7th Cir. 2000); Oddi v. Mariner-Denver, Inc., 461 F. Supp. 306, 310 (S.D.Ind. 1978). The same should therefore be true with sister corporations. There is an exception to this general rule "[w]here a parent utilizes its subsidiary in such a way that an agency relationship can be perceived . . . [or] the parent has greater control over the subsidiary than normally associated with common ownership and directorship or where the subsidiary is merely an empty shell." Wesleyan Pension Fund, Inc. v. First Albany Corp., 964 F. Supp. 1255, 1261 (S.D.Ind. 1997) (citations and internal quotations omitted). This is not the case here where, although both REP International and REP Corporation are owned by REP, they have separate by-laws, minutes, corporate records, financial records, and bank accounts. (Def.'s Ex. 10.) They have different boards, albeit with some shared members. (Id.) The transactions between the two are conducted as if by two unrelated entities with negotiated prices and late fees. (Def.'s Ex. 10.) Therefore REP Corporation's contacts with Indiana cannot be used to assert personal jurisdiction over REP International.
Neither can personal jurisdiction in Indiana be obtained over REP International based on its independent distributor's contacts with Indiana. In Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 459 (10th Cir. 1996), the Tenth Circuit determined that a foreign corporation was not subject to general personal jurisdiction based on the contacts of its independent distributor, absent an agency relationship between the company and its independent distributor. Just as in Kuenzle, there is no evidence that REP Corporation is an agent of REP International. Instead, it functions as REP International's independent distributor in the United States. Because the contacts of REP Corporation cannot be used to satisfy the doing business requirement of the Indiana long-arm statute, REP International is not subject to personal jurisdiction in Indiana under that provision.
Likewise, REP International does not satisfy any of the other bases for asserting jurisdiction under the long-arm statute. REP International has not performed any act or omission in Indiana, does not regularly do or solicit business in Indiana, has not supplied or contracted to supply services or goods in Indiana, and owns no real property in Indiana. Indiana Trial Rule 4.4(A) does not provide a basis for asserting personal jurisdiction over REP International.
Even if Indiana Trial Rule 4.4(A) were satisfied, asserting personal jurisdiction over REP International must satisfy the Due Process Clause of the Fourteenth Amendment. In Anthem, 730 N.E.2d at 1235, the Indiana Supreme Court looked to whether a corporation was incorporated in Indiana, had offices in Indiana, employees in Indiana, agents in Indiana, property in Indiana, and direct advertising or solicitation of Indiana residents to determine if continuous and systematic contacts existed between Indiana and the defendant sufficient to assert general personal jurisdiction. In this case, none of these criteria exist, and Indiana clearly does not have sufficient contacts with REP International to exercise personal jurisdiction over it such that REP International could reasonably anticipate being haled into court in Indiana on any matter.
Furthermore, as discussed below, the notions of fair play and substantial justice weigh against asserting jurisdiction over REP International in Indiana.
B. Specific Personal Jurisdiction
As a preliminary matter, it is unclear whether Williams is making any claim that there is specific personal jurisdiction over REP International in Indiana.
Williams claims that this court should look at all of REP International's contacts with Indiana and then cites to a case that describes the concepts of general and specific personal jurisdiction. (Pl.'s Resp. at 8.) It is unclear whether this is meant to limit his argument to that of general personal jurisdiction or if Williams is confused on the concept of specific personal jurisdiction, which is jurisdiction based on the defendant's contacts with a State that form the basis of the lawsuit. See Black's Law Dictionary 857 (7th ed. 1999).
However, to be thorough, this court will evaluate any claim Williams has potentially made. For many of the same reasons as above, REP International does not satisfy Indiana Trial Rule 4.4(A) in the context of specific personal jurisdiction. REP International had no connection with Indiana relating to the subject matter of the lawsuit. The only possible basis for asserting jurisdiction under the long-arm statute is doing business in Indiana. However, REP International did not sell any product directly to Indiana residents, had no business solicitations in Indiana, and no contacts with Indiana businesses. REP International sold the press in question to a German company, which sold the press to another foreign corporation, which then transferred the press to Indiana.
Also, all the transactions with Indiana cited by Williams involving Indiana residents are transactions with REP Corporation, not REP International. Additionally, asserting jurisdiction over REP International violates the Due Process Clause. To establish specific personal jurisdiction over a defendant, the defendant must have purposefully established contacts with the forum state and the basis of the lawsuit must arise out of these contacts. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). When evaluating issues of specific personal jurisdiction, the court must examine the quality and nature of the activities taking place within the state to determine if they are related to the basis of the lawsuit and the result of deliberate conduct by the defendant. Anthem, 730 N.E.2d at 1236. Much of counsel's arguments in this case rests on whether REP International placed the V-47 Intelinject Press into the stream of commerce.
Arguably under the broad stream of commerce theory adopted by the Seventh Circuit, REP International "deliver[ed] its products into the stream of commerce with the expectations that they w[ould] be purchased by consumers in the forum state." World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980). As in Asahi Metal Industry Co. v. Superior Court of California, REP International benefited from sales within the Indiana and "indirectly benefits from the State's laws that regulate and facilitate commercial activity." 480 U.S. 102, 117 (1987) (Brennan, J., concurring in part and concurring in result). That theory applied in Asahi even though the defendant did not sell any of its parts directly in the forum state, but sold them to a manufacturer who sold the finished goods worldwide. Id. at 106. In this case, at least some of REP International's products entered the stream of commerce in the United States.
Construing the facts in favor of the Plaintiff, Greco, the International Sales Director for REP International, was aware that the press was going to the United States. (Quenaud Dep. Ex. 28.)
That is not the end of the due process analysis however because Asahi made clear that even if there are sufficient contacts, jurisdiction is not proper if it does not comport with "fair play and substantial justice." Id. at 116. This analysis is based on the five factors enunciated in Burger King, 471 U.S. at 476-77: (1) the burden on the defendant, (2) the forum State's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial systems interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several States in furthering fundamental substantive policies.
The factors weigh similarly to the analysis presented in Asahi, 480 U.S. at 114. First, the burden on the defendant is great. REP International would be faced with "[t]he unique burdens placed upon one who must defend oneself in a foreign legal system." Id. Indiana has more of an interest in the current litigation than California did in Asahi because one of its residents was injured. However, an efficient resolution of the dispute does not weigh heavily on either side because although the Plaintiff is in Indiana, the design information about the press and all the accompanying research is located in France. Finally, the interests of the "several States," which the Asahi court understood to mean the procedural and substantive policies of other nations, is considered to be very important. Id. at 115. This court is convinced that given the international context and heavy burden on the alien defendant, the exercise of personal jurisdiction by an Indiana court in this instance would be unreasonable and unfair.
IV. Conclusion
For the foregoing reasons, the Defendant's Motion to Dismiss is GRANTED. The dismissal is without prejudice against refiling the cause in a court with personal jurisdiction.