766 F.2d 440 (10th Cir. 1985), 83-1362, Fidelity and Cas. Co. of New York v. Philadelphia Resins Corp.

Docket Nº:83-1362.
Citation:766 F.2d 440
Case Date:July 02, 1985
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 440

766 F.2d 440 (10th Cir. 1985)




No. 83-1362.

United States Court of Appeals, Tenth Circuit

July 2, 1985

Page 441

William H. ReMine, III of Montgomery Little Young Campbell & McGrew, P.C., Englewood, Colo., for plaintiff/appellee.

Karen J. McClurg, Kipp & Christian, P.C., Salt Lake City, Utah (D. Gary Christian and Teresa L. Sturm, Salt Lake City, Utah, on brief), for defendant/appellant.

Before BARRETT and SEYMOUR, Circuit Judges, and KANE, [*] District Judge.

BARRETT, Circuit Judge.

Philadelphia Resins Corporation (PRC), a Pennsylvania Corporation, and one of two defendants in the district court, appeals from judgment for the plaintiff, Fidelity and Casualty Company of New York. Plaintiff's insured was a French geophysical exploration company, Compagnie Generale de Geophysique (CGG).

This was a tort action which arose from an accident in a mountainous area north of Salina, Utah, on February 11, 1978. CGG had been conducting seismic operations in the area, and had contracted with Randall Rogers, a helicopter pilot from Pea Ridge, Arkansas, to fly CGG's seismic equipment and personnel to and from testing sites in the field. Prior to leaving for Utah to perform his transportation contract with CGG, Rogers contacted PRC by telephone and ordered three "Phillystran" synthetic fiber cables for use in suspending loads from the helicopter. Rogers had contacted PRC after reading an advertisement for the cables in "Aerial Applicator" magazine, a trade publication. R. Vol. IV, p. 125. Rogers told the PRC employee that he planned to use the cable in the Rocky

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Mountain region, although he did not know at the time what particular state he would be taking the cable to. R. Vol. IV, p. 134. PRC shipped the cables to Rogers' address in Arkansas, and Rogers brought them to Utah for use in performing his contract with CGG. On February 11, 1978, Rogers was lifting equipment belonging to CGG with his helicopter when the "Phillystran" cable snapped and the load fell to the ground, resulting in approximately $120,000 in damage to the equipment.

On January 15, 1980, CGG commenced this lawsuit, naming Rogers and PRC as defendants, alleging sale by PRC of a defective product and negligence on the part of both PRC and Rogers. PRC made a special appearance to contest the court's jurisdiction, but the court disagreed with PRC's position, deciding the question in favor of the plaintiff. After substitution of the insurance company as the named plaintiff, the cause was tried to a jury. The jury returned a special verdict, finding that Rogers was not negligent, that CGG was 12% negligent, and that PRC was 88% negligent. The jury further found that PRC had sold a defective product unreasonably dangerous to the user. Judgment was rendered accordingly, and PRC now appeals, raising three distinct issues for our review. However, we will consider only the first issue raised by PRC, that being whether or not the Utah district court had in personam jurisdiction over the Pennsylvania corporation. Because we find that in personam jurisdiction over PRC was lacking, we will dismiss without consideration of the other issues of substantive law.

The question whether a federal court has in personam jurisdiction over a nonresident defendant in diversity cases is determined by the law of the forum state. Yarbrough v. Elmer Bunker & Associates, 669 F.2d 614 (10th Cir.1982). In applying this rule, the district court exercised in personam jurisdiction over PRC in accordance with Utah's "long arm" statute, which provides that a nonresident submits himself to the jurisdiction of the Utah courts on any claim arising from "The causing of injury within this state whether tortious or by breach of warranty." Utah Code Ann. Sec. 78-27-24 (Supp.1983). 1 The statute, on its face, applies to PRC, and because the Utah legislature has specifically directed that the statute "should be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution," Utah Code Ann. Sec. 78-27-22 (Supp.1977), the "minimum contacts" doctrine of International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) becomes critical. Our inquiry is thus reduced to a single question: Does PRC have sufficient "minimum contacts" with the State of Utah to support the exercise of in personam jurisdiction?

Before examining the law of "minimum contacts" and applying that law to the facts of this case, we will review the evidence presented in the district court concerning

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PRC's contacts with the State of Utah. We note in this regard that the burden of establishing in personam jurisdiction over the defendant is on the plaintiff. Yarbrough v. Elmer Bunker & Associates, supra. PRC is in the business of manufacturing and selling a variety of epoxy resin compounds, 2 as well as a variety of tower guys, ropes, and cables. PRC sells some 10-15% of its products in Pennsylvania, and has sold its products in all fifty states, although it has never sold "Phillystran" cables (the product used by Rogers) to customers in Utah. R.Vol. I, pp. 48, 51. From 1978 through 1980, PRC made sales of its other products to a total of ten customers in Utah, amounting to less than one-tenth of one percent of PRC's gross sales. R.Vol. I, pp. 63-64. PRC's epoxy resin products are sold through a network of distributors, but its "Phillystran" cables are sold directly to consumers with no distributorship network. R.Vol. I, p. 47. PRC advertises in trade publications targeted at specific professions or industries, which presumably have a national circulation, although, as PRC stated in answer to an interrogatory, "There is no way of determining where advertising ultimately ends up. Publications may well be disseminated worldwide." R.Vol. I, p. 52. There is no evidence that PRC advertises by any method specifically directed at the Utah market, nor is there any evidence that PRC employs any personnel in Utah. The sum total, then, of PRC's contacts in Utah are: (1) a miniscule number of sales of products other than "Phillystran" cable, (2) advertising in a national trade magazine that presumably reaches Utah, and (3) the failure of one of its defective "Phillystran" cables in Utah after the cable was taken there by one of its customers.

The leading case on the "minimum contacts" doctrine is International Shoe Co. v. State of Washington, supra. In that case, the State of Washington had asserted in personam jurisdiction over the International Shoe company for the purpose of assessing mandatory contributions to the State's unemployment compensation fund. The company was a Delaware corporation with its principal place of business in St. Louis, Missouri. It argued that the exercise of in personam jurisdiction was improper in that the company had no office in Washington, stocked no merchandise there, had no agent for service of process in the State, and made no contracts for the sale or purchase of merchandise there. The company did, however, employ some eleven to thirteen salesmen in the state, who exhibited samples of merchandise and solicited...

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