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Arizona School Risk Retention Trust Inc. v. NMTC Inc.

United States District Court, D. Arizona

March 14, 2016

Arizona School Risk Retention Trust, Inc., Plaintiff,
v.
NMTC, Inc. d/b/a Matco Tools, et al., Defendants.

ORDER

PAUL G. ROSENBLATT UNITED STATES DISTRICT JUDGE

Among the motions pending before the Court is Techway Industrial Company Limited’s Motion to Dismiss the Plaintiff’s Complaint Under Fed.R.Civ.P. 12(b)(2) and 12(b)(5) (Doc. 123). Having considered the parties’ memoranda in light of the relevant record, the Court finds that defendant Techway Industrial Company Limited (“Techway”) should be dismissed from this action pursuant to Fed.R.Civ.P. 12(b)(2) because the Court lacks personal jurisdiction over it.[1]

Background

This action arose from a fire that destroyed a transportation building belonging to the Round Valley Unified School District No. 5 in Eager, Arizona on May 12, 2013. The school district is a participating member of plaintiff Arizona School Risk Retention Trust, Inc. (“plaintiff’) and its membership agreement with the plaintiff provides the plaintiff with a right of subrogation. The plaintiff’s contention is that the fire originated in an allegedly defective lithium-ion battery in a rechargeable drill that the plaintiff asserts was manufactured and/or supplied by Techway; the drill at issue was one from co-defendant Matco Tools (“Matco”) that Matco alleges it purchased from co-defendant Professional Tool Products L.L.C. (“PTP”). According to the plaintiff, the drill was manufactured by Techway with a battery purchased from proposed new defendant Samsung SDI Co., Ltd. The First Amended Complaint (Doc. 48) alleges claims of negligence (Count I), strict liability/products liability (Count II), and breach of implied warranties of merchantability and fitness for a particular purpose (Count III) against Techway, as well as against the other named defendants without distinguishing among them.

Personal Jurisdiction-Related Evidence

It is undisputed that Techway is incorporated in Taiwan and has its principal place of business in Taiwan. In support of its contention that the Court lacks personal jurisdiction over it, Techway has submitted the affidavit of Chung, Fu-Hsiang, Techway’s president.[2] The affidavit sets forth the following: (1) that Techway is in the business of designing and manufacturing battery packs and chargers, among other things; (2) that Techway does not sell or ship any products to Arizona; (3) that Techway has no distributors in Arizona; (4) that Techway has no knowledge that its products will be shipped to or sold in Arizona; (5) that Techway is not licensed, authorized, or registered to do any business in the United States, including Arizona; (6) that Techway has never executed a contract in Arizona; (7) that Techway has never provided any services in Arizona nor has it ever provided any services to any person in Arizona; (8) that Techway has never paid taxes in Arizona; (9) that Techway has never owned, rented or leased any real or personal property in Arizona; (10) that Techway has never maintained any place of business in Arizona, and it has never maintained a telephone number, telex or telefax number, or address in Arizona; (11) that Techway has no assets in Arizona; (12) that Techway has never had an agent for service of process in Arizona; (13) that Techway has never had any employees, including sales persons, representatives, agents or servants, conduct business in Arizona; (14) that Techway has no employees who attend trade shows or conduct meetings in Arizona; and (15) that Techway has never been a party to another lawsuit in Arizona.

In support of its opposition to the Rule 12(b)(2) motion, the plaintiff has submitted an affidavit from Marty Huguet, the president of co-defendant PTP, which is located in South Carolina. The Huguet affidavit states: (1) that PTP purchased the battery-powered drill, battery charger and battery pack at issue from Techway, and PTP then sold the drill to co-defendant Matco for Matco to sell through its nationwide distributor base, which includes distributors in Arizona; (2) that in 2008-2009, PTP entered into a Supplier Agreement with Techway for Techway to supply drills to PTP at PTP’s South Carolina facility that would be developed in a Matco-style housing and brand which PTP would then sell to Matco for Matco to distribute nationally, that there was an understanding that this item would be exclusive to PTP/Matco in the United States market in that housing and style, that under this agreement, Techway supplied its designed and manufactured products that Techway knew at the time of the agreement would be distributed to all Matco distributors throughout the United States, including Arizona, and that with this assurance, Techway agreed to the exclusivity provision[3]; (3) that Matco utilizes a different marketing and distribution model than other competitors in that Matco tools may only be purchased from an authorized vendor located within a specific coverage area, and there are such authorized vendors in Arizona; (4) that during the product development process, Techway provided copies of quality and certification and testing by its own and standardized laboratory facilities, including but not limited to UL listing; (5) that as a further condition of the Supplier Agreement, PTP required Techway to acquire insurance covering any claims in the United States that might arise out of its merchandise, including the drills, that Techway provided PTP with a certificate of insurance for coverage in the United States, which included insurance coverage for Arizona, and that based on this assurance, PTP purchased merchandise, including the drill, and that PTP has bought many thousands of Techway products for distribution throughout the United States, including Arizona; and (6) that PTP and Matco agree on the warranty statement and PTP provides to Techway the artwork for the warranty statement to be printed by Techway on every product instruction manual, and PTP provides related warranty information to Techway on an annual basis, and this includes information concerning warranty information related to products in Arizona.[4]

The plaintiff has also submitted as evidence supporting its jurisdiction-related argument (1) copies of six exemplar United States patents issued to Techway, none of which has anything to do with the allegedly defective rechargeable drill at issue here[5], and (2) a copy of a certificate for products liability insurance, dated October 7, 2014, issued to Techway by Fubon Insurance, another Taiwanese company, for worldwide coverage, including the United States and Canada, for the cordless power tools and battery pack/battery chargers Techway distributes, but with a policy period of July 01, 2014 to July 01, 2015, which does not include the date the fire at issue here occurred, which was on May 12, 2013.

Discussion

Techway has moved to dismiss this action as to it pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction; it argues that the Court has neither general nor specific personal jurisdiction over it. Since the plaintiff only argues in its response that specific jurisdiction exists here, the Court will resolve Techway’s Rule 12(b)(2) motion only on that ground.

The burden of proof is on the plaintiff to show that specific personal jurisdiction is appropriate over Techway, and it needs to make that showing as to each claim asserted against Techway. Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir.2015). Since the Court is only considering the parties’ pleadings and their submitted written materials without holding an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to defeat the motion to dismiss, Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir.2014), i.e., it need only demonstrate admissible facts that if true would support jurisdiction over Techway. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir.1995). Only contacts occurring prior to the event causing the litigation, i.e., the May 12, 2013 fire, may be considered by the Court. Farmers Ins. Exchange v. Portage La Prairie Mutual Ins. Co., 907 F.2d 911, 913 (9th Cir.1990).

Where, as here, there is no applicable federal statute governing personal jurisdiction, the Court applies the law of the state in which it sits. Martinez, at 1066. Arizona’s long-arm statute provides that an Arizona court may exercise personal jurisdiction over a nonresident defendant to the maximum extent permitted under the Due Process Clause of the United States Constitution. Ariz.R.Civ.P. 4.2(a); A. Uberti and C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz.1995). The Constitution permits a court to exercise personal jurisdiction over a nonresident defendant if that defendant has at least “minimum contacts” with the forum such that the exercise of jurisdiction “does not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted). The “‘minimum contacts’ inquiry principally protects the liberty of the nonresident defendant, not the interests of the plaintiff.” Walden v. Fiore, 134 S.Ct. 1115, 1125 n.9 (2014).

Since the issue here is specific jurisdiction over a nonresident of Arizona, the inquiry turns on whether the suit-related conduct that Techway itself created constituted a substantial connection with Arizona at the time of the fire. Id., at 1121-22. This inquiry is resolved through a three-prong test: (1) Techway must have purposefully directed its activities or consummated some transaction with Arizona or an Arizona resident, or performed some act by which it purposefully availed itself of the privilege of conducting activities in Arizona, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to Techway‘s Arizona-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. Picot v. Weston, 780 F.3d at 1211. All three factors must exist for personal jurisdiction to apply. Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir.1995). The burden of proving that the exercise of jurisdiction would not be reasonable shifts to Techway only if the plaintiff first meets its burden of proving the first two prongs. Picot, at 1212. Since the Court concludes that the plaintiff has failed to meet its burden with respect to the first prong of the specific personal jurisdiction test, the Court need not, and does not, reach the issues involved with whether the second and third prongs have been met.

The first prong of the test, and the deciding prong here, is analyzed under either a purposeful availment standard or a purposeful direction standard, which are two distinct concepts. Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012). Since the plaintiff’s claims against Techway are breach of contract and nonintentional tort-related ones, the Court will utilize the purposeful availment standard. See Holland America Line Inc. v. Wärtsilä North America, Inc., 485 F.3d 450, 460 (9th Cir.2007) (“[I]t is well established that the Calder [purposeful direction] test applies only to intentional torts, not to the breach of contract and negligence claims[.]”); see also, Marvix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, 1228 (9th Cir.2011) (noting that the Supreme ...


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