877 F.3d 895 (10th Cir. 2017), 16-1408, Old Republic Insurance Company v. Continental Motors, Inc.

Docket Nº:16-1408
Citation:877 F.3d 895
Opinion Judge:MATHESON, Circuit Judge
Party Name:OLD REPUBLIC INSURANCE COMPANY, Plaintiff-Appellant, v. CONTINENTAL MOTORS, INC., Defendant-Appellee.
Attorney:Michael L. Poindexter, The Law Offices of Michael L. Poindexter, Golden, Colorado, for Plaintiff-Appellant. Norman E. Waldrop, Jr., Armbrecht Jackson LLP, Mobile, Alabama (Sherri R. Ginger and Benjamin Y. Ford, Armbrecht Jackson LLP, Mobile, Alabama; and Theresa R. Warden and Jennifer L. Parker, ...
Judge Panel:Before MATHESON, McKAY, and McHUGH, Circuit Judges.
Case Date:December 15, 2017
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
SUMMARY

The Tenth Circuit addressed whether the federal district court in Colorado may exercise specific personal jurisdiction over out-of-state defendant Continental Motors, Inc. based upon its contacts with Colorado through its website. Continental Motors’ website allows airplane repair businesses known as fixed- base operators (“FBOs”) to obtain unlimited access to its online service manuals in... (see full summary)

 
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877 F.3d 895 (10th Cir. 2017)

OLD REPUBLIC INSURANCE COMPANY, Plaintiff-Appellant,

v.

CONTINENTAL MOTORS, INC., Defendant-Appellee.

No. 16-1408

United States Court of Appeals, Tenth Circuit

December 15, 2017

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Appeal from the United States District Court for the District of Colorado (D.C. No. 1:16-CV-00046-JLK)

Michael L. Poindexter, The Law Offices of Michael L. Poindexter, Golden, Colorado, for Plaintiff-Appellant.

Norman E. Waldrop, Jr., Armbrecht Jackson LLP, Mobile, Alabama (Sherri R. Ginger and Benjamin Y. Ford, Armbrecht Jackson LLP, Mobile, Alabama; and Theresa R. Warden and Jennifer L. Parker, Wheeler Trigg O'Donnell, Denver, Colorado, on the brief), for Defendant-Appellee.

Before MATHESON, McKAY, and McHUGH, Circuit Judges.

OPINION

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MATHESON, Circuit Judge

This appeal addresses whether the federal district court in Colorado may exercise specific personal jurisdiction over out-of-state defendant Continental Motors, Inc., a manufacturer of airplane engines, based upon its contacts with Colorado through its website. Continental Motors' website allows airplane repair businesses known as fixed-base operators (" FBOs" ) to obtain unlimited access to its online service manuals in exchange for an annual fee. Arapahoe Aero, a Colorado-based FBO participating in the program, accessed and consulted the manuals in servicing an airplane that contained engine components manufactured by Continental Motors. The airplane later crashed in Idaho on a flight from Colorado.

After the crash, Old Republic Insurance Company, the airplane's insurer, paid the owner for the property loss and filed a subrogation action against Continental Motors in Colorado federal district court, seeking reimbursement. Old Republic alleged that Continental Motors' online service manuals and bulletins contained defective information, thereby causing the crash. Continental Motors moved to dismiss the lawsuit for lack of personal jurisdiction, arguing that it did not purposely direct its activities at Colorado. In response, Old Republic contended that Continental Motors had targeted its website and online manuals toward Colorado residents, thereby subjecting itself to personal jurisdiction as to claims arising out of these contacts. Old Republic conceded that Continental Motors did not maintain sufficient contacts with Colorado to support jurisdiction for all purposes. The district court granted the motion to dismiss, ruling that it did not have specific jurisdiction over Continental Motors.

On appeal, Old Republic maintains that Continental Motors is subject to specific personal jurisdiction in the State of Colorado for purposes of this case. It bases its jurisdictional argument entirely on Continental Motors' contacts with Colorado through its website and online manuals. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

I. BACKGROUND

A. Factual History

The following facts, except where otherwise indicated, are drawn from the operative complaint and the written materials that Old Republic submitted to the district court in support of the court's jurisdiction over Continental Motors. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (on motion to dismiss for lack of personal jurisdiction, " [t]he allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits" (quotations omitted)); OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998) (a plaintiff may satisfy its prima facie burden by submitting an " affidavit or other written materials [containing] facts that if true would support jurisdiction over the defendant" ).

1. The Parties

Plaintiff-Appellant Old Republic is an insurance company incorporated in Pennsylvania, with its principal place of business in Illinois. Defendant-Appellee Continental Motors is an aircraft engine and parts manufacturer incorporated in Delaware, with its principal place of business in Alabama. Arapahoe Aero, a Colorado corporation and FBO,[1] is not a party to this

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case. Arapahoe Aero operates a repair station, certified by the Federal Aviation Administration (" FAA" ), out of the Centennial Airport in Englewood, Colorado.

2. The Aircraft Accident

On January 9, 2014, an airplane insured by Old Republic (the " Aircraft" ) crashed in Idaho on a flight from Colorado. The Aircraft's engine contained magnetos2 manufactured by Continental Motors and serviced by Arapahoe Aero in reliance on one of Continental Motors' online manuals and two bulletins. Because the service manual and bulletins allegedly provided inadequate instructions, Arapahoe Aero failed to properly inspect and replace the magnetos' nylon distributor gears when it serviced the Aircraft in September of 2009 and again in December of 2013. The gears later failed during the Aircraft's flight on January 9, 2014, resulting in the crash.

When the Aircraft crashed, it belonged to Nylund Imports, Inc. (" Nylund" ), a Colorado corporation. Nylund kept the Aircraft at the Centennial Airport in Englewood, Colorado. After the crash, Old Republic paid Nylund a $329,500 settlement for the value of the Aircraft3 and also incurred other expenses in mitigating damages. In exchange for this payment, Nylund assigned its rights and interest in the Aircraft, including claims for property damage, to Old Republic.

3. Continental Motors' FBO Services and Rewards Program

Continental Motors offers the FBO Services and Rewards Program (the " FBO Program" ), which it advertises on its website's FBO Program webpage. In the five-year period preceding the crash, 20 FBOs from Colorado— including Arapahoe Aero— participated in the FBO Program. Arapahoe Aero first enrolled in 1996.

Membership in the FBO Program, which in 1996 cost about $1,000 annually, now costs about $240 annually.4 In addition to paying the fee, participating members of the FBO Program must agree to a set of terms and conditions imposed by Continental Motors (" FBO T&C" ). The FBO T&C provides, among other things, that members must complete an online profile, which involves submitting their addresses. The FBO T&C also provides that Continental Motors " reserves the right to make changes or terminate [the FBO Program] at any time." App., Vol. I at 63.

At all relevant times, the FBO Program provided member FBOs with complete access to Continental Motors' online service manuals, some of which were also made available for free to the public.5 Over time, Continental Motors has made more of its online service manuals free to the public.

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When Arapahoe Aero serviced the Aircraft in September of 2009, online access to the particular manual it referenced (the " Manual" ) was still restricted to members of the FBO Program.6 By the time Arapahoe Aero serviced the Aircraft in December of 2013, however, anyone could access the Manual online for free.7 In contrast to its service manuals, Continental Motors' online service bulletins— including the ones relied on by Arapahoe Aero in servicing the Aircraft— were freely accessible to the public at all relevant times.

Besides unrestricted access to online service manuals, participating FBOs received additional benefits from enrolling in the FBO Program. First, Continental Motors listed participating FBOs on its FBO Locator webpage. App., Vol. I at 58 (" As a member your shop will be listed in the query locator on our website. Your customers will have the ability to search for FBO's ... by Country, State, and City bringing more customers to your business." ).8 Second, Continental Motors allowed participating FBOs to send two representatives to a week-long training school at the Continental Motors factory in Mobile, Alabama. Id. Third, Continental Motors rewarded a participating FBO $500 for every one of its engines it installs. Id. Fourth, Continental Motors provided participating FBOs with dedicated customer support. Id. (" Highly-trained technical staff located in our Global Customer Support Center are available to help you learn the system and will assist you with your service and maintenance needs as well. It's like having your own dedicated technical service representative at your facility." ).

B. Procedural History

Old Republic brought a subrogation action against Continental Motors in the U.S. District Court for the District of Colorado. Old Republic's amended complaint— the operative one here— sought damages for one claim of strict liability in tort based on the Aircraft's magnetos' allegedly defective design, manufacture, and instructions.

Continental Motors moved to dismiss under...

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