Category: Personal Jurisdiction

LG Chem Secures a Second Look at Jurisdictional Issues in NJ Vape Battery Suit

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The New Jersey Appellate Division has held that Korean company LG Chem Ltd. (“LG Chem”)will have another opportunity to dispute New Jersey’s jurisdiction over it in a product liability lawsuit concerning a vaping device battery.  The decision is based, in part, on the trial court’s failure to order jurisdictional discovery and convene an evidentiary hearing to resolve the disputed jurisdictional allegations before deciding LG Chem’s pre-answer motion to dismiss.  This case underscores that in New Jersey, the standard governing motions to dismiss for lack of jurisdiction, unlike other bases, requires the court to look outside the disputed pleadings alone.

The New Jersey plaintiff alleged he was injured when a lithium-ion battery manufactured by LG Chem exploded in his pocket.  Plaintiff attempted to serve process on LG Chem through two of its U.S.-based subsidiaries, LG Chem America, Inc. (LGCAI) and LG Chem Michigan, Inc. (LGCMI).  The agents of both refused to accept service.

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Foreign Manufacturer Dismissed for Lack of Personal Jurisdiction in the Southern District of Indiana

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Case:

Patterson v. Chiappa Firearms, USA, LTD, No. 1:20-cv-01430-JPH-MG, 2021 WL 4287431 (S.D. Ind. Sept. 21, 2021).

Significance:

  • First Indiana case to apply the “relate to” standard articulated in Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021).
  • Rejects a broad, unlimited stream of commerce theory for establishing personal jurisdiction.
  • Denied plaintiff jurisdictional discovery, noting that foreign nationals should not be subjected to extensive discovery in order to determine whether personal jurisdiction over them exists.

Case Analysis:

In Patterson v. Chiappa Firearms, the plaintiff, an Indiana citizen, bought a handgun from an online gun seller in Kentucky and had it delivered to Indy Arms Company in Indianapolis. The gun subsequently exploded in Indiana when the plaintiff test-fired it, fracturing the plaintiff’s finger. The gun was manufactured by Chiappa Italy and distributed by Chiappa USA.

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Another Roadside Attraction: The Supreme Court’s Latest Route Guidance on Personal Jurisdiction in Products Liability Cases

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On March 25, the U.S. Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, revisiting the issue of due process limitations on the exercise of personal jurisdiction, most recently addressed by the Court in 2017 in Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1783 (2017) (“BMS”).  A unanimous Court (8-0, with Justice Barrett not participating) held in Ford Motor that courts in Montana and Minnesota could hear claims by residents of those states alleging injuries sustained in accidents that occurred there involving Ford vehicles.  Relying on Ford’s extensive contacts with those states, which consisted of efforts to create and serve local sales and service and repair markets for the same kinds of vehicles, the Court concluded these plaintiffs’ claims were sufficiently “related to” Ford’s local contacts, even though the actual vehicles in the accidents were designed, manufactured and initially sold in other states.  (We commented here on the state court decisions in these cases before Ford sought certiorari.)

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IL Supreme Court Follows BMS To Hold Courts May Not Exercise Personal Jurisdiction Over Claims of Out-of-State Plaintiffs for Out-Of-State Injuries From A Device Made Out-Of-State

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In an important decision in accord with the U.S. Supreme Court’s 2017 landmark ruling on personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of Calif., 137 S. Ct. 1773 (2017) (BMS), the Illinois Supreme Court held that Illinois courts may not exercise personal jurisdiction over claims of out-of-state plaintiffs for personal injuries suffered outside of Illinois from a device manufactured outside of Illinois. Rios v. Bayer, 2020 IL 125020 (June 4, 2020).

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Post-BMS, Courts Grapple with the Nexus Between Stream of Commerce Activities and the Plaintiff’s Claim Required for Specific Jurisdiction over Manufacturers in Product Liability Cases

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Courts have struggled for decades to define the constitutional limitations on personal jurisdiction over major product manufacturers who sell their products nationwide. The central tension has been determining the validity and potential scope of the “stream of commerce” theory in a world of advancing technology and associated evolution of business operations and practices. That tension is increasing as state courts decide what kind of nexus is required, between a defendant’s “forum-directed” commercial activities and the plaintiff’s claim, to justify the exercise of specific jurisdiction. Specifically, how purposefully forum-directed and how closely tied to the specific claim must the activities be?

Stream of commerce theory posits that a defendant that has placed a product into the nationwide channels of commerce should anticipate that its products will thereby be “swept” into any state and if it causes injury there, it will be subject to suit. In its purest form, the theory collides to some degree with the fundamental limiting requirement that a defendant may be haled into a forum to litigate only where it has “purposely availed” itself of the privilege of doing business by, for example, directing its products into the forum.

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Clinical Trial Activity Is Not an Exception to the Rule

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Defendants and courts have seen a variety of arguments set forth in attempts to demonstrate specific personal jurisdiction. One argument seen with increasing frequency in medical products cases is that specific jurisdiction exists over an out-of-state defendant for the claims of non-resident plaintiffs because the defendant conducted clinical trials of the product at issue in the forum state. Courts have consistently rejected this argument.

For example, in Moore v. Bayer Corp., 2018 WL 4144795 (E.D. Mo. Aug. 29, 2018), three Missouri plaintiffs joined 95 non-Missouri plaintiffs to sue Bayer and four of its subsidiaries in Missouri state court. All plaintiffs alleged that they had suffered personal injuries as a result of being prescribed and implanted with the medical device Essure. The non-resident plaintiffs argued that specific jurisdiction existed because Bayer worked on the regulatory approval of Essure in Missouri. Plaintiffs alleged that “Missouri was one of eight principal sites in the United States chosen to conduct pre-market clinical trials of Essure. Missouri hospitals and physicians were used in these clinical investigations, and the Missouri study results were used to support the FDA approval process of Essure.” After analyzing Bristol–Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773 (2017) [BMS], the court held that “[t]he injury claims of the non-Missouri plaintiffs lack an adequate connection to Bayer’s activities in Missouri for specific jurisdiction. The non-Missouri plaintiffs were not prescribed Essure in Missouri, they did not have the device implanted in Missouri, and they were not injured in Missouri.” The court went on to state that “[t]he non-Missouri plaintiffs do not allege to have taken part in Missouri clinical trials nor do they allege to have personally reviewed or relied on the resulting data.”

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