Cardona v. Hitachi Koki Co., Ltd.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
Eduardo Diaz Cardona and
Wendy Cardona,
Plaintiffs, C.A. NO.: N15C-09-21() SKR
V.
Hitachi Koki Co., Ltd.,
Hitachi Koki U.S.A., Ltd., and
Schell Brothers, LLC,
Defendants.
Submitted: December 29, 2018
Decided: February 5, 2019
Upon Defena'ant Hitachi Kokz`` Co., Ltd. ’S Motz``on to Dismissfor Lack of Personal
Jurisa'iction: DENIED.
David A. Boswell, Hudson, Jones, Jaywork & Fisher, LLC, Brian D. Kent (pro hac
vice) (argued), Samuel I. Reich (pro hac vice), Laffey, Bucci & Kent, LLP,
Attorneys for Plaintiffs.
Thomas J. Gerard, Bradley D. Remick (pro hac vice) (argued), Marshall Dennehey
Warner Coleman & Goggin, Attorneys for Defendant Hitachi Koki CO., Ltd.
Kenneth M. DOSS, Casarino Christman Shalk Ransom & Doss, P.A., Attorney for
Defendant Schell Brothers, LLC.
Rennie, J.
OPINION
This case arises out of a September 26, 2013 injury. Plaintiff Eduardo Diaz
Cardona (“Plaintiff’) Was using a Hitachi NV83A3 contact trip nail gun in
connection With his job responsibilities at a construction site in Sussex County, When
the nail gun allegedly malfunctioned and ejected a nail directly into Plaintiff’s eye,
causing serious and permanent injuries Plaintiff brought this action against the
manufacturer and the distributor of the nail gun, and the general contractor of the
construction site, alleging various counts of Wrongdoing. NoW before the Court is
the manufacturer’s Motion to Dismiss for Lack of Personal Jurisdiction.
I. FACTS1 AND PROCEDURAL BACKGROUND
Defendant Hitachi Koki Co., Ltd. (“HKK”), the designer and manufacturer of
the NV83A3 nail guns, is a Japanese corporation and has its principal place of
business in Tokyo, Japan. HKK designs the NV83A3 nail guns in Japan and
manufactures them in Taiwan. HKK inspects and tests the nail guns for operational
safety, and also creates the safety manual, Warning instructions, and labels that are
to be provided With the nail guns.
Defendant Hitachi Koki U.S.A., Ltd. (“HKU”) is a Delaware corporation With
its principal place of business in Georgia. HKU is a Wholly-owned subsidiary of
1 The facts recited herein are drawn largely from the Special Master’s July 26, 2018 Report and
Recommendations.
2
HKK, and was created to sell power tools manufactured by HKK, including the
NV83A3 nail guns, in the U.S. market. HKK and HKU have two board directors in
common. HKK is the guarantor on HKU’s Georgia bank accounts and the property
leased for HKU’s facility in Georgia.
HKU is the exclusive U.S. distributor of HKK products. HKU ultimately
decides where a HKK product is sold and what product is sold, but HKK is fully
aware of HKU’s major customers The Hitachi Koki Group, of which HKK is a
part, in a 2016 financial report, stated that it “eXpanded transactions with a major
home center chain, with which it had strengthened its alliance. . . .” The “major
home center chain” refers to Lowe’s, which sells the NV83A3 nail guns. HKK
power tool products are also sold to the general public through the website
http://www.hitachipowertools.com/.
Plaintiff is a Maryland resident who was employed by MDI Contractors, LLC
(“MDI”) of Georgetown, Delaware, which was one of the subcontractors assigned
to perform construction work at the “Osprey Landing” project in Sussex County,
Delaware. On September 26, 2013, while working at Osprey Landing, Plaintiff used
a Hitachi NV83A3 nail gun, and the nail gun allegedly malfunctioned, ejected a nail
directly into Plaintiff’ s eye, and caused him permanent injuries. The nail gun at issue
was supplied to Plaintiff by MDI, but there is no direct evidence in the record
showing where or by whom it was purchased.2
On September 24, 2015, Plaintiff filed this action against HKK, HKU, and
Osprey Landing’s general contractor, Schell Brothers, LLC.3 The claims against
HKK and HKU include negligence, breach of express and implied warranties, and
breach of various consumer protection statutes. HKK moved to dismiss the case for
lack of personal jurisdiction under Superior Court Civil Rule l2(b)(2).4 The Court
denied HKK’s motion without prejudice, and allowed the parties to conduct
jurisdictional discovery.5 After the jurisdictional discovery was completed, HKK
filed a Renewed Motion to Dismiss.6 On September 28, 2017, the Court appointed
a Special Master to rule on HKK’s Renewed Motion to Dismiss and some related
discovery issues. On July 26, 2018, the Special Master issued his Report and
Recommendations, finding that the Court has personal jurisdiction over HKK. Both
parties filed EXceptions to the Report. On December 21, 2018, with leave of the
2 The Special Master found that the nail gun was purchased by MDI in Delaware. Special Master’s
Report and Recommendations at 26 (Trans. ID. 62278669). HKK disputed this fact. HKK’s
Exceptions to Special Master’s Report and Recommendations at 3 (Trans. ID. 62291209). In
response, Plaintiff merely stated that the presumption that the nail gun was purchased in Delaware
“would be correct based on the circumstantial evidence.” Plaintiff s Response to HKK’s
Exceptions at 6-7 (Trans. ID. 62347498).
3 Complaint (Trans. ID. 57917647).
4 HKK’s Morion to Dismiss (Trans. iD. 58494979).
5 March l7, 2016 Order (Trans. ID. 58734971).
6 HKK’s Renewed Motion to Dismiss (Trans. ID. 60839030).
4
Court, HKK filed a supplemental brief in support of its Exceptions,7 to which
Plaintiff responded on December 29, 2018.8 After consideration of the Special
Master’s Report, the parties’ EXceptions and Responses thereto, decisional law, and
the entire record in this case, the Court now DENIES HKK’s Renewed Motion to
Dismiss for Lack of Personal Jurisdiction.
II. STANDARD OF REVIEW
Superior Court Civil Rule 122 provides that a Special Master’s report is
subject to de novo review by the Court.9
ln considering a motion to dismiss under Superior Court Civil Rule l2(b)(2)
for lack of personal jurisdiction, the plaintiff bears the burden to prove a non-
frivolous basis for the Court’s assertion of jurisdiction.10 The plaintiff satisfies this
»11
burden by “making a prima facie showing that jurisdiction is conferred by statute.
The facts are interpreted in a light most favorable to the plaintiff12
7 HKK’s Supplemental Brief in Support of Exceptions to Special Master’s Report (Trans. ID.
62795555).
8 HKK submitted an Order from the Court of Common Pleas of Philadelphia County, where in a
purportedly similar case, the Court granted dismissal of HKK for lack of personal jurisdiction
However, the Order from the Philadelphia Court is only a l-page document stating that HKK was
dismissed from that case. There are no facts or legal analysis that this Court can take into
consideration Therefore, the Court will not consider the Philadelphia Order in rendering a
decision on HKK’s Motion.
9 Super. Ct. Civ. R. 122(c).
10 Mabey v. Crystalite Bohemia, S.R.O., 2018 WL 775402, at *3 (Del. Super. Feb. 6, 2018)
(intemal citations omitted).
11 Id. (internal citation omitted).
12 [a’. (internal citation omitted).
III. LEGAL ANALYSIS
ln determining the issue of personal jurisdiction over a nonresident, Delaware
courts apply a two-step analysis. First, the Court must determine whether
jurisdiction is appropriate under Delaware’s long-arm statute. Additionally, the
Court evaluates whether asserting jurisdiction would comport with the Due Process
Clause of the United States Constitution.13 These two tests are independent.14
A. Long-Arm Statute
Delaware’s long-arm statute, 10 Del. C. §3104(c), allows the Court to exercise
jurisdiction over a nonresident defendant when that person:
(l) Transacts any business or performs any character of work or service
in the State;
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission in this
State;
(4) Causes tortious injury in the State or outside of the State by an act
or omission outside the State if the person regularly does or solicits
business, engages in any other persistent course of conduct in the State
or derives substantial revenue from services, or things used or
consumed in the State; . . . .15
13 Wright v. Am. Home Proa's. Corp., 768 A.2d 518, 527 (Del. Super. 2000) (internal citation
omitted).
14 Id. (intemal citation omitted).
15 Section 3104(0) enumerates six categories of acts that will submit a nonresident defendant to a
Delaware court’s jurisdiction. Plaintiff s assertion of jurisdiction is based solely on § 3104(0)(1)
and (c)(4).
Delaware’s long-arm statute is broadly construed to confer jurisdiction “to the
maximum extent possible under the Due Process Clause.”16
ln line with modern in personam jurisdiction ideologies,17 §3104(0) has been divided
into two categories: general and specific jurisdiction.18 Sections 3104(0)(1)-(3) have
been deemed to be specific jurisdiction provisions.19 Specific jurisdiction is at issue
only when a plaintiff s claims arise out of or relates to the defendant’s contacts with
Delaware.20 Section 3104(c)(4), on the other hand, is deemed to confer general
jurisdiction.21 General jurisdiction does not require that the plaintiff s claims relate
to the defendant’s contacts with the forum, but the defendant’s affiliations with the
forum must be “so continuous and systematic as to render it essentially at home” in
the forum state.22
In applying the provisions of the Delaware long-arm statute, Delaware courts
have developed a concept known as “dual jurisdiction,” which arises from a
combination of §3104(0)(1) and (c)(4). This term was first referenced by the
Delaware Supreme Court in LaNuova D & B, S.p.A. v. Bowe Co., in dictum:
16 Hercules, Inc. v. Leu Tr. & Banking (Bahamas) Ltd., 611 A.2d 476, 480 (Del. 1992) (internal
citations omitted).
17 See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (differentiating
between general or all-purpose jurisdiction, and specific or case-linked jurisdiction).
18 Hedger v. Medline lndus., lnc., 2017 WL 396770, at *3 (Del. Super. Jan. 27, 2017) (intemal
citation omitted).
19 Id. (internal citations omitted).
20 Ia'. (intemal citations omitted).
21 Id. (internal citations omitted).
22 Id. (intemal citations omitted).
lt is conceivable that a tort claim could enjoy a dual jurisdiction basis
under (c)(l) and (c)(4) if the indicia of activity set forth under (c)(4)
were sufficiently extensive to reach the transactional level of (c)(l) and
there was a nexus between the tort claim and transaction of business or
performance of work.23
The “dual jurisdiction” concept was thereafter adopted and applied by the Delaware
Superior Court in Boone v. Oy Partek Ab,24 as a basis to confer jurisdiction over a
foreign manufacturer where its contact with Delaware stems from an allegedly
defective product that was introduced into and caused tortious injury in Delaware.25
In Boone, a Finland-based asbestos company, Partek, contracted with a New
York firm, Huxley, giving Huxley the exclusive right to sell Partek’s asbestos in the
U.S.26 Huxley purchased asbestos from Partek, already bagged and labeled, F.O.B.
Helsinki.27 Huxley was responsible for finding customers for Partek’S asbestos and
any inquiries made to Partek from the U.S. buyers were turned over to Huxley.28
The Court found that, although none of the 3104(c) provisions applied in that case,
jurisdiction over Partek was still appropriate under the “dual jurisdiction” doctrine.
23 LaNuova D & B S.p.A. v. Bowe C0., 513 A.2d 764, 768 n.3 (Del. 1986) (emphasis added).
24 Boon@ v. Oy PartekAb, 724 A.2d 1150 (Del. super. 1997).
25 HKK argues that Boone is no longer good law in light of recent U.S. Supreme Court cases. HKK
does not specify in which regard, long-arm statute or Due Process, Boone is not good law. The
Delaware Supreme Court has not had occasion to revisit or clarify the “dual jurisdiction” concept
since LaNuova. At least for long-arm statute purposes, Boone has never been rejected by the
Delaware Supreme Court and has been consistently applied and cited by subsequent Delaware
Superior Court cases.
26 Boone, at 1153.
27 Id.
28 Ia'.
To support its finding of jurisdiction, the Court focused on the goal of the long-arm
statute, i.e., providing a means of redress to recover from nonresident defendants.29
The Court also adopted the “stream of commerce” theory,30 which is typically
applied as part of the Due Process analysis to jurisdiction and found that this theory
can independently satisfy the first step of the jurisdictional analysis and confer
jurisdiction under §3104.31 While acknowledging that the “stream of commerce”
theory does not fit neatly into any of the 3104(0) categories, the Court in Boone
found that LaNuova’s creation of the “dual jurisdiction” concept presented a fitting
solution to encompass the intricacies of the “stream of commerce” theory and
included it as part of the analysis of the Delaware long-arm statute.32
29 Id. at 1156.
30 The “stream of commerce” theory will be discussed in detail in the next section in connection
with the Due Process analysis.
31 Boone, at 1157.
32 Id. The Court’s analysis in Boone, however, is not without criticism. First, by borrowing and
injecting the constitutional “stream of commerce” concept into the analysis of the long-arm statute,
the Boone decision has been criticized for violating the principle that the long-arm statute should
be separately analyzed from the Due Process consideration Rouna' Rock Research LLC v.
ASUST ek Comput. Inc., 967 F. Supp. 2d 969, 976 (D.Del 2013). Moreover, the determination that
LaNuova’s “dual jurisdiction” footnote endorsed the inclusion of “stream of commerce” into the
long-arm statute has been criticized as being overreaching Id. (“[A] reasonable interpretation of
this footnote would be that the [Delaware] Supreme Court was doing nothing more than stating
the obvious, that is, that the (c)(l) and (c)(4) subsections involve overlapping concepts, and there
thus might be times when the set of facts that establishes general jurisdiction under (c)(4) also
establishes specific jurisdiction under (c)(l), and thus the jurisdiction would be ‘dual.”’). While
an argument can be made that the “dual jurisdiction” doctrine created by Boone is beyond the
scope of the Delaware long-arm statute, it is not for that reason alone invalid. ln fact, subsequent
to Boone, the “dual jurisdiction” doctrine has been continually applied by this Court and the
District Court for the District of Delaware in determining the issue of personal jurisdiction
involving foreign manufacturers See Mabey v. Crystalite Bohemia, S.R.O., 2018 WL 775402
(Del. Super. Feb. 6, 2018); Hea'ger v. Medline Indus., Inc., 2017 WL 396770 (Del. Super. Jan. 27,
2017); Crane v. Home Depot, Inc., 2008 WL 2231472 (Del. Super. May 30, 2008); Wright v. Am.
9
Further, the Court in Boone held that, to satisfy “dual jurisdiction”,
§ 3104(c)(l) and (c)(4) should not be “overemphasize[d],” as it is not important that
“the indicia of activity under § 3104(0)(4) rise to a level of ‘ general presence”’ or
that the defendant manufacturer itself acts in Delaware.33 Rather, the Court held that
“dual jurisdiction” exists as long as ( l) the defendant manufacturer demonstrates “an
intent or purpose to serve the Delaware market with its product,” and (2) that intent
or purpose results in the introduction of the product into Delaware and ultimately
causes the plaintiff’s injury.34 The Court found that there was an intent on the part
of Partek to serve the Delaware market, based on the fact that Partek engaged Huxley
as its exclusive distributor and solicited business from the country as a whole,
including Delaware.35 The Court also found that, as a result of this solicitation
Partek shipped up to 50 tons of asbestos to Delaware per month and earned hundreds
of thousands of dollars from its sales, and the plaintiff’ s injury arose out of exposure
Home Prods. Corp., 768 A.2d 518 (Del. Super. 2000); see also Bela’en Tech., Inc. v. L.S. Corp.,
829 F. Supp. 2d 260 (D.Del. 2010); Power Integrations, Inc. v. BCD Semiconductor Corp., 547
F. Supp. 2d 365 (D.Del. 2008). Hence, the Court finds that the “dual jurisdiction” doctrine is still
valid in Delaware. lf the “dual jurisdiction” doctrine adopted by Boone is to be further clarified
or even overturned, that decision should be made by the Delaware Supreme Court.
33 Boone, at 1158.
34 Id.
33 Id. HKK argues that an intent to serve the U.S. market as a whole does not establish an intent
to serve Delaware in light of recent U.S. Supreme Court cases. As discussed in footnote 24, supra,
dual jurisdiction is a concept created and applicable only in the analysis of the long-arm statute.
As far as the long-arm statute is considered, a nonresident defendant’s “intent to serve the United
States market is sufficient to establish an intent to serve the Delaware market, unless there is
evidence that the [defendant] intended to exclude [Delaware] from its marketing and distributing
efforts . . . .” Hedger, at *7 (intemal citations omitted).
10
to the asbestos sold by Partek.36 Thus, Partek was found to be subject to the
jurisdiction of this Court.
Plaintiff argues that this case fits into Boone’s “dual jurisdiction” scenario.
The Court agrees. The facts here are very similar to those in Boone. HKK set up
HKU, a Delaware corporation, as its exclusive U.S. distributor, for the purpose of
selling its products in the U.S. market, including Delaware. Under Boone, this
demonstrates HKK’s intent to serve Delaware. Although the factual record does not
contain any specific sales data for the NV83A3 nail guns, the fact that they are
mass-marketed, mass-produced consumer products offered for sale through Lowe’s,
when viewed in a light most favorable to Plaintiff, supports a strong inference that
significant amounts of NV83A3 nail guns have been sold in each state, including
Delaware. And it is undisputed that Plaintiff was injured by a NV83A3 nail gun
used in Delaware as a result of these sales. Hence, the facts in this case satisfy the
“dual jurisdiction” requirements established in Boone. The first prong of the
jurisdiction analysis, the long-arm statute, is met.
B. Due Process Clause
The next step is to determine whether this case passes constitutional Due
Process mustor. Due Process requires that the defendant has sufficient “minimum
36 Boone, at 1158.
ll
contacts” with the forum state, such that subjecting him to the forum’s jurisdiction
“does not offend traditional notions of fair play and substantial justice.”37
a. Minimum Contacts
To establish specific jurisdiction, “minimum contacts” require a showing that
the defendant “purposefully avails itself of the privilege of conducting activities”
within the forum state, and that the controversy “arises out of or relates to” those in-
state activities.38
Plaintiff s argument primarily rests on the “stream of commerce” theory. This
term was first utilized by the U.S. Supreme Court in Worla'- Wide Volkswagen Corp.
v. Woodson, where it held that a foreign corporation meets the “purposeful
availment” requirement, and is subject to a forum state’s jurisdiction, if it “delivers
its products into the stream of commerce with the expectation that they will be
purchased by consumers in the forum state.”39 Since Worla'- Wide Volkwagen, the
U.S. Supreme Court has twice attempted and twice failed to clarify the contours of
the stream of commerce theory of jurisdiction, resulting in several competing
interpretations, none of which garnered a majority.
37 lm’l Shoe CO_ v. Wash., 326 U.s. 310, 316 (1945) (intemal citations emitted).
33 DaimlerAG v. Bauman, 571 U.S. 117, 127 (2014) (internal citation omitted); Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 475 (1985) (internal citation omitted).
39 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980).
12
ln Asahi Metal Ina'ustry C0. v. Superior Court of California, Solano County,
Justice O’Connor, joined by three justices, opined that “placement of a product into
the stream of commerce, without more,” does not establish personal jurisdiction40
Rather, there should be some “additional conduct” of the defendant indicating “an
intent or purpose to serve the market in the forum state.”41 Simple awareness was
deemed not enough.42 In contrast, Justice Brennan, also joined by three members of
the Court, found that minimum contacts exist when the defendant is aware that its
products are being marketed in the forum state, as long as the sale is part of “the
regular and anticipated flow” of commerce, but not some “unpredictable currents or
eddies,” i.e., an isolated occurrence.43 Finally, Justice Stevens, rendering a third
opinion, found that “the volume, the value, and the hazardous character” of the
product affects the “purposeful availment” determination and suggested that a
“regular course of dealing” that results in deliveries of over 100,000 units annually
would constitute “purposeful availment.”44
49 Asahi Metal Ina'us. Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102, 112 (1987)
(plurality opinion).
41 Id. Justice O’Connor did not provide a definition for the required “additional conduct,” but gave
some examples that qualify, 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.” Ia'.
42 Ia’.
43 Id. at 117 (Brennan, J., concurring in part and concurring in judgment).
44 Id. at 122 (Stevens, J., concurring in part and concurring in judgment).
13
The next effort by the U.S. Supreme Court to revisit the stream of commerce
doctrine and reconcile the competing opinions occurred in J. McIntyre Machinery,
Ltd. v. Nicastr0.45 Unfortunately, the Court was still divided. Justice Kennedy,
writing for four justices, seemed to have embraced the “stream of commerce plus”
test articulated by Justice O’Connor, and further narrowed the test by announcing
that a defendant’s transmission of goods justifies personal jurisdiction only where
“the defendant can be said to have targeted the forum.”46 According to Justice
Kennedy, marketing and sales efforts directed at the United States generally are not
enough.47 ln contrast, Justice Breyer’s concurring opinion declined to pronounce a
broad rule that “refashion[s] basic jurisdiction rules,” and found that the matter can
be resolved solely by adhering to the Court’s precedents48 Applying the Court’s
precedents, Justice Breyer found that personal jurisdiction could not be
constitutionally asserted over the defendant foreign manufacturer, under any of the
three Asahi tests, based on the following facts: the manufacturer’s agreement with a
U.S. distributor to pursue customers throughout the United States; a single sale in
the forum state; and the manufacturer’s business-related activities in various states
45 564 U.s. 873 (2011).
46 1a at 882.
47 Id. at 886 (“These facts may reveal an intent to serve the U.S. market, but they do not show that
J. McIntyre purposefully availed itself of the New Jersey market.”).
48 Ia’. at 890 (Breyer, J., concurring in judgment). Justice Breyer found that the case did not present
issues concerning recent changes to modern commerce and communication and therefore it was
“unwise to announce a rule of broad applicability without full consideration of the modem-day
consequences.” Id. at 887 (Breyer, J., concurring in judgment).
14
other than the forum state.49 Those key facts present in J. McIntyre are much more
attenuated than those present in this case.
Under Marks v. United States, when there is not a single controlling opinion,
the holding of the U.S. Supreme Court should be viewed as “the position taken by
»50
those Members who concurred in the judgments on the narrowest grounds.
Circuit courts interpreting J. McIntyre have concluded that Justice Breyer’s
l
concurring opinion furnished the “narrowest grounds” for the decision5 Hence,
applying Justice Breyer’s approach, the law remains the same after .]. McIntyre, and
courts may, without establishing a broad bright-line rule, continue to attempt to
reconcile the competing Supreme Court pronouncements of the stream of commerce
doctrine.52 The Court here follows this approach.
There are sufficient facts in this case that support the exercise of jurisdiction
over HKK under at least two of the three Asahi tests. In this case, HKK (through
HKU) solicited business from the whole U.S. market, and as a result of that
49 Ia'. at 889 (Justice Breyer found that a single sale in the forum state did not constitute a “regular
flow” or “regular course” of sales, and that there was no “something more” such as those
circumstances listed in Justice O’Connor’s plurality opinion).
SOMarks v. U.s., 430 U.s. 188, 193 (1977).
31 See In Re Chinese-Manufactarea' Drywall Proa’s. Liab. Litig., 753 F.3d 521, 541 (5th Cir. 2014)
(citing AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1363 (Fed. Cir. 2012)); See also
Williams v. Romarm, SA, 756 F.3d 777, 784 (D.C. Cir. 2014). But see Shuker v. Smith & Nephew,
PLC, 885 F.3d 760, 780 (3rd. Cir. 2018) (applying Justice Kennedy’s plurality opinion in
J. McIntyre and holding that efforts “to exploit a national market that necessarily included [the
forum state]” are insufficient to establish personal jurisdiction).
32 In re Chinese-Manufactarea' Drywall, at 541.
15
solicitation, HKK’s products were sold in Delaware and in each of the fifty states,
through national retailers such as Lowe’s. So there was certainly a “regular and
anticipated flow of commerce” into Delaware, rather than some “random, fortuitous,
or attenuated contacts” which the Supreme Court held are not enough to hale a
defendant into a jurisdiction53 And HKK was clearly engaged in a “regular course
of dealing” with HKU, resulting in the entry of a high volume of products with a
hazardous character into Delaware. Hence, this case satisfies the two tests
articulated by Justice Brennan and Justice Stevens.
This case arguably also satisfies Justice O’Connor’s plurality test. In Asahi,
a Japanese tube valve assembly manufacturer sold its products to a Taiwanese tire
tube manufacturer, and the Taiwanese corporation incorporated the valve assemblies
into its tire tubes and sold the tire tubes to the U.S. market.34 Unlike the Japanese
manufacturer in Asahz``, it is not that HKK simply placed its nail guns into the stream
of commerce, and the commerce eventually swept the nail guns into Delaware.
Instead, HKK intended to exploit the U.S. market, including Delaware, and took the
affirmative step to set up a Delaware subsidiary, HKU, to carry out that goal. HKK
and HKU have two directors in common HKK was fully aware of, and likely
anticipated, the cooperation with Lowe’s. This was a considered and contemplated
33 Burger ng, 471 U.s. at 475.
34 Asahi, 480 U.s. at 106.
16
sales approach by HKK. Hence, there is “something more” than simply placing the
goods into the stream of commerce. This factual circumstance is very similar to
“marketing the product through a distributor who has agreed to serve as the sales
agent in the forum State,” which Justice O’Connor acknowledged as sufficient to
establish the “additional conduct.”55
HKK argues that an intent to serve the entire U.S. market does not establish
the required minimum contacts after J. McIntyre, but rather there must be an action
that targets the forum. That position comes from Justice Kennedy’s plurality
opinion, which, as discussed above, does not control. Justice Breyer’s concurrence,
which the Court finds is the narrowest ruling in that case and thus controlling, has
explicitly rejected to announce such a rule of “broad applicability.”56 Justice Breyer
simply found that an agreement with a national distributor which resulted in only
one product being sold in the forum state, plus the defendant’s officer’s attending
trade shows in other states, did not qualify as “something more.” However, the
record in this case contains more pertinent facts than that in J. McIntyre. HKU is
not merely an unrelated, third-party distributor. lnstead, it is a wholly-owned
subsidiary of HKK incorporated in Delaware and established to sell HKK’s products
throughout the U.S., including Delaware. Unlike the single sale in J. McIntyre, a
55 Id. at 112.
36 J. McIntyre, at 887 (Breyer, J., concurring in judgment).
17
high quantum of HKK’s products have actually been displayed in the numerous
stores of national retailers like Lowe’s and sold in Delaware. The facts here are
distinguishable from those in Asahi and J. McIntyre. And the Court finds that
exercising jurisdiction is consistent with the mandates articulated in those two U.S.
Supreme Court precedents
During oral argument, HKK relied heavily upon Bristol-Myers Sqaibb Co. v.
Saperior Court of California, San Francisco Coanty,37 and argued that it nullifies
the “stream of commerce” theory. The Court disagrees ln Bristol-Myers, a group
of more than 600 plaintiffs, most of whom were not Califomia residents, filed
actions in a Califomia state court based on injuries allegedly caused by a drug
manufactured and sold by the defendant.58 The issue was whether jurisdiction
existed with regard to those nonresident plaintiffs’ claims The issue in Bristol-
Myers was resolved based upon circumstances that are totally different from those
at issue in this case, In that case, there was no dispute that the defendant purposefully
availed itself of the Califomia market.59 The U.S. Supreme Court, however, found
no jurisdiction because those nonresidents’ claims did not arise out of or relate to the
defendant’s Califomia contacts60 The Court noted: “What is needed-and what is
57137 s.ct. 1773 (2017).
33 Id_ at 1778.
33 1a
60 1a 311781_82.
18
missing here_is a connection between the forum and the specific claims at issue.”61
Here, there is a connection Plaintiff was performing a job duty in Delaware when
he was allegedly injured by a HKK nail gun The nail gun was supplied to Plaintiff
by his Delaware employer. There is no dispute that Plaintiffs claims are connected
to HKK’s Delaware contacts Therefore, the constitutional “minimum contacts”
requirement is satisfied here as HKK purposefully availed itself of the privilege of
doing business in Delaware, and Plaintiffs claims arise out of those activities
b. Reasonableness
Once the defendant has been found to have purposely established “minimum
contacts” within the forum state, the defendant could defeat personal jurisdiction
only if it presents “a compelling case that the presence of some other considerations
would render jurisdiction unreasonable.”62 Those considerations include: “the
burden on the defendant,” “the forum State’s interest in adjudicating the dispute,”
“the plaintiffs interest in convenient and effective relief,” “the interstate judicial
system’s interest in obtaining the most efficient resolution of controversies,” and
“the shared interest of the several States in furthering fundamental substantive social
policies.”63
3‘1d. 311781.
62 Burger Kz``ng, at 477.
63 Ia'. (quoting Worla'- Wide Volkswagen, 444 U.S. at 292).
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HKK did not make an unreasonableness argument in either its Exceptions or
at oral argument. After a brief review of the above factors, the Court finds that they
favor jurisdiction in any event. The Court acknowledges that there may be a slight
burden on HKK to defend this matter in Delaware. But this is true for any such
foreign defendant in a personal injury dispute, and does not, in and of itself, defeat
jurisdiction Delaware has a strong interest in guarding the safety and welfare of its
citizens and deterring the introduction of dangerous products into this State. Plaintiff
was allegedly injured by a dangerous product and clearly has an interest in obtaining
relief from its designer and manufacturer in a convenient forum, There is no
argument that any other state in the U.S. would provide a more effective and efficient
forum, or have a stronger interest, in the resolution of the current matter. Therefore,
weighing the combined interest of Plaintiff and Delaware against the burden on
HKK leads this Court to conclude that jurisdiction over HKK is reasonable.
While agreeing with the Special Master’s final conclusion, Plaintiff takes
exception to the Special Master’s omission in considering an agency theory that,
Plaintiff contends, alternatively supports the finding of jurisdiction Plaintiff seems
to concede that the current factual record does not support an agency relationship
between HKK and HKU, but contends that more discovery is needed to establish
such a relationship Since the Court has found jurisdiction under the “stream of
commerce” theory, it is unnecessary to allow additional jurisdictional discovery. For
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the same reason, Plaintiffs request for additional discovery regarding HKK’s patent
infringement case filed in the District Court for the District of Delaware is also
denied.
IV. CONCLUSION
For the foregoing reasons, jurisdiction is conferred by Delaware’s long-arm
statute, and does not violate HKK’s Due Process rights HKK’s Motion to Dismiss
for Lack of Personal Jurisdiction is hereby DENIED.
IT IS SO ORDERED.
LAKAzlielcfon K. Rennie, Jt@e%
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