Knox v. MetalForming, Inc.

• Decision Date: 30 January 2019
• Docket Number: Nos. 18-1550,18-1551,s. 18-1550
• Parties: Stephen D. KNOX; Jean Knox, Plaintiffs, Appellants, v. METALFORMING, INC., Defendant, Appellant, Schechtl Maschinenbau GmbH, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

914 F.3d 685

Stephen D. KNOX; Jean Knox, Plaintiffs, Appellants,

v. METALFORMING, INC., Defendant, Appellant,Schechtl Maschinenbau GmbH, Defendant, Appellee.

Nos. 18-1550

18-1551

United States Court of Appeals, First Circuit.

January 30, 2019

Benjamin R. Zimmermann, with whom Stacey L. Pietrowicz and Sugarman and Sugarman, P.C., Boston, MA, were on brief, for Stephen and Jean Knox.

Javier F. Flores, with whom Eric V. Skelly, Thaddeus M. Lenkiewicz, and Manning Gross & Massenburg LLP, Boston, MA, were on brief, for MetalForming, Inc.

Frederick W. Reif, with whom Marie E. Chafe, Cornell & Gollub, Boston, MA, Debra Tama, and Wilson Elser Moskowitz Edelman & Dicker, LLP, New York, NY, were on brief, for Schechtl Maschinenbau GmbH.

Before Lynch, Stahl, and Barron, Circuit Judges.

LYNCH, Circuit Judge.

Stephen Knox's hand was badly injured at his work at Cape Cod Copper

(CCC) in October 2016 when he operated a machine that was manufactured by defendant Schechtl Maschinenbau GmbH, a German company. The machine had been sold to CCC by defendant MetalForming, Inc., an American company located in Georgia and Schechtl's U.S. distributor.

The question on appeal is whether there is personal jurisdiction over Schechtl, named as a defendant by Knox and as a cross-claim defendant by MetalForming. The district court dismissed the claims against Schechtl, finding that Schechtl had not purposefully availed itself of the privilege of doing business in Massachusetts. Knox v. MetalForming, Inc., 303 F.Supp.3d 179, 184 (D. Mass. 2018).

We reverse.

I.

A. Background

The district court did not permit jurisdictional discovery. Id. at 187. The following facts are undisputed.

In October 2016, Stephen D. Knox, plaintiff here along with his wife, Jean, was injured while using a Schechtl MAX 310,¹ a motor-driven metal-bending machine. The injury occurred at CCC, Knox's place of employment, located in Lakeville, Massachusetts. When Knox inadvertently hit the foot pedal of CCC's MAX 310, the machine activated, crushing his left hand.

Schechtl, the manufacturer of the MAX 310, is headquartered in Edling, Germany and maintains no operations in the United States. The company's marketing materials say that Schechtl manufactures the "most popular architectural sheet metal folders in the world."

Schechtl sells its machines to United States customers through MetalForming, a separate and independently owned U.S. distribution company. Schechtl's distribution agreement ("the agreement") with MetalForming gives MetalForming the exclusive right to distribute Schechtl's products in the "Contract Territory," which comprises Canada, the United States, and Mexico.

The agreement outlines the procedure for selling Schechtl's machinery. The purchasing end user ("the purchaser") places an order with MetalForming, which in turn acquires the machine from Schechtl. MetalForming then sends a purchase order, naming the purchaser, to Schechtl in Germany. Under the agreement, MetalForming must include "technical and other data" in the purchase order, because that information is "of importance for the ordered product, the supply contract, and its performance."

Schechtl then chooses whether to accept the purchase order. If it does accept, it issues a written order confirmation, which "govern[s] the product to be delivered, its technical qualities, the delivery price, the place of delivery, the time of delivery as well as all other relevant contractual provisions."

Schechtl then manufactures the machine to the purchaser's specifications. The agreement provides that Schechtl "reserves the right, in the exercise of its sole discretion, to discontinue the manufacture or distribution of any Product without incurring any obligation to [MetalForming]."

When the machine is ready, Schechtl delivers it to a "freight forwarder or other transport agency" in Germany, at which point ownership passes to MetalForming. The record does not detail the ordinary shipment process after that point, but, as we describe below, it does show how the MAX 310 that injured Knox came to CCC.

Under the agreement, MetalForming is responsible for installation at the purchaser's site and for training the purchaser's personnel in the proper use of the machine. The agreement does, however, provide that it may "become necessary that installation work be conducted under the direction of a" Schechtl technician. And there is somewhat different information as to training contained in the information manual, as noted below.

The agreement also requires that MetalForming "provide any and all warranty services for the" Schechtl products. Schechtl provides a one-year warranty "to the end users for all of its machines, machine parts, tools, spare parts, and accessories."

MetalForming must also, under the agreement, "pass along to customers information received from [Schechtl]" regarding the products and their proper use. This information is packaged in with each machine when it is delivered to the purchaser. The enclosed material includes a declaration that the machine had been "developed, designed and manufactured in compliance with" applicable European safety directives. It also includes instruction manuals and safety instructions for each machine.

The instruction manual includes an "Instruction for Inquiries and Spare Part Orders," which directs purchasers to contact Schechtl (and not MetalForming) for inquiries and for additional machine parts. A later troubleshooting section of that manual also instructs that operators experiencing a problem should, "[i]f it is not possible to correct the malfunction with the aid of the following tables, contact the Schechtl Maschinenbau GmbH Service department." It does not instruct the operator/purchaser to contact MetalForming. The manual also offers that "[t]he operating company may receive extensive machine training by Schechtl Maschinenbau GmbH upon request ... at [Schechtl's] facilities or at the operating company's facilities." There is no evidence as to whether any Massachusetts purchaser made such a request.

The materials provided to the purchasers of Schechtl machines contain Schechtl's direct contact information, including its phone and fax numbers and its mail and email addresses. Schechtl also operates a website that instructs purchasers of its machines to contact Schechtl directly for frequently asked questions, sales, parts, and other information relating to its machines. See Schechtl, http://www.schechtl.biz/index_e.htm (last visited Jan. 24, 2019).

Schechtl has provided MetalForming with advertising materials to market Schechtl products in the United States. MetalForming has promoted Schechtl machines in national trade publications and at industry trade shows. There is no record evidence as to the Massachusetts recipients of those trade publications. And while the record shows that Schechtl representatives attended several trade shows in the United States with MetalForming, there is no evidence that any of those shows were in Massachusetts.

Between 2000 and September 2017, MetalForming sold 2,639 Schechtl sheet metal machines throughout the United States, at a value of just over $97 million. Between July 2001 and September 2017, MetalForming sold to purchasers in Massachusetts forty-five Schechtl machines and 234 Schechtl parts, at a value of nearly $1.5 million (about $1.3 million for the machines and $176,752 for the parts). Schechtl's Massachusetts machine sales appear to constitute 1.35% of its United States machine sales. The record does not reveal Schechtl's total parts sales in the U.S.

Schechtl sold the MAX 310 which injured Knox to MetalForming in April 2001. MetalForming took delivery in Georgia. In August, four months after the initial sale, MetalForming shipped the machine to CCC, with CCC taking ownership of the machine in Georgia. The respective purchase orders show that MetalForming purchased the machine from Schechtl for $25,830 and sold it to CCC for $38,950. The purchase order from MetalForming to Schechtl identified the purchaser as CCC but did not give CCC's location. The purchase order from MetalForming to CCC shows that the machine came with a one-year Schechtl warranty and that the price included a "Schechtl Installation Charge" and a "Schechtl Freight Charge" to the purchaser, but no party explains what these last two terms mean or who receives the payment.

B. Procedural History

The Knoxes sued both Schechtl and MetalForming in Massachusetts state court. They alleged negligence, breach of warranty, loss of consortium, and violation of the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A. MetalForming removed the case to Massachusetts federal district court and filed crossclaims against Schechtl for indemnification, contribution, and breach of contract. Schechtl moved to dismiss the claims against it for lack of personal jurisdiction. Both the Knoxes and MetalForming opposed Schechtl's motion.

The district court, after finding that the terms of Massachusetts's long-arm statute were "easily ... satisfied," Knox, 303 F.Supp.3d at 183, nonetheless granted Schechtl's motion to dismiss, id. at 188. The court reasoned that, even though "Schechtl ha[d] derived ... ‘substantial revenue’ from MetalForming's sales of Schechtl equipment to Massachusetts customers," id. at 186, Schechtl had not purposefully availed itself of the privilege of doing business in Massachusetts, id. at 187. The court added that there was "[n]o Massachusetts-specific ‘plus’ factor," like " ‘special state-related design, advertising, advice, marketing,’ etc." Id. at 186 (quoting J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 889, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011) (Breyer, J., concurring) ). The court did not mention either the instructions or the warranties that Schechtl provided to the purchasers in Massachusetts.

This appeal followed.

II.

The district court held that MetalForming had not made a prima facie showing of personal jurisdiction. See id. at 184. On prima facie...