The World in U.S. Courts: Winter 2016 - Personal Jurisdiction
September.28.2016
Scott Dingeldey’s foot and leg had been trapped in a steel cord cutter machine used in the production of tires, and he sued VMI Holland, B.V., a Dutch corporation, the machine’s designer and distributor. The accident occurred in New York, where Dingeldey was employed at the time.
VMI moved to dismiss the claim, arguing that it lacked minimum contacts with New York sufficient for general or specific personal jurisdiction and that the assertion of jurisdiction would violate the Due Process Clause of the US Constitution. Dingeldey responded that VMI had sufficient contacts with New York arising from its shipment of machinery to the State and its active solicitation of suppliers there for its products.
The Magistrate Judge in New York observed that the federal court may exercise personal jurisdiction to the same extent as New York courts, which required satisfaction of State jurisdictional statutes as well as the Due Process Clause of the federal constitution. In pertinent part, New York permits the assertion of jurisdiction where: (i) the defendant committed a tortious act outside New York, (ii) the cause of action arose from that act, (iii) the act caused an injury in New York, (iv) the defendant had reason to expect that any defects would have direct consequences in New York State, and (v) that VMI “derived substantial revenue from international commerce.” To conform to federal due process requirements, the defendant must have “purposely availed” itself of the privilege of conducting activities with the forum state.
The Court found the first four State requirements satisfied through a plausible inference that VMI voluntarily sold the machine with knowledge it would be shipped to New York and used in the operations that resulted in Dingeldey’s injury. It rejected VMI’s arguments that the statute should not apply to a single transaction and that jurisdiction under the New York law could not attach because title to the machine was transferred in the Netherlands. The Court also found that VMI was part of a group that was an international market leader in its field, and inferred that the fifth requirement was also satisfied, even though revenues from the single transaction at issue might be small. With respect to the federal due process requirement, the Court noted that a defendant is not deemed to have “purposefully availed” itself of the forum merely by being a manufacturer that has put its products into the stream of commerce; rather, some “targeting” of the forum jurisdiction must be shown. This targeting was found through VMI’s manufacture of the machine for, and shipment to, Dingeldey’s New York employer. VMI’s remaining due process concerns likewise were not deemed substantial. The Court concluded that forcing VMI to proceed in New York was not fundamentally unfair because New York counsel had already been selected, depositions could be done by video-conference, and VMI likely had the financial capacity to litigate in New York. Likewise, VMI’s concerns about international comity or creating international friction were rejected as unrealistic because jurisdiction over a claim of negligence was being asserted where VMI directly interacted with New York and the action arose directly from that contact.
Accordingly, the Magistrate Judge recommended that VMI’s motion to dismiss for lack of personal jurisdiction be denied.