Abuan v. General Elec. Co.

• Decision Date: 08 May 1990
• Docket Number: No. CV 90-0031.,CV 90-0031.
• Citation: 735 F. Supp. 1479
• Parties: Bartolome E. ABUAN, et al., Plaintiffs, v. GENERAL ELECTRIC CO., a corporation, and Monsanto Co., a corporation, Defendants.
• Court: U.S. District Court — District of Guam

735 F. Supp. 1479

Bartolome E. ABUAN, et al., Plaintiffs, v. GENERAL ELECTRIC CO., a corporation, and Monsanto Co., a corporation, Defendants.

No. CV 90-0031.

United States District Court, D. Guam.

April 20, 1990.

As Amended May 8, 1990.

Mesirov, Gelman, Jaffe, Cramer & Jaimeson, Leon Rose, Alan C. Milstein, Philadelphia, Pa., Cunliffe, Cook, Maher & Keller, John B. Maher, Agana, Guam, for plaintiffs.

Bronson, Bronson & McKinnon, Charles F. Preuss, Barbara L. Major, San Francisco, Cal., Klemm, Blair, Sterling & Johnson, J. Bradley Klemm, Agana, Guam, for Monsanto Co.

Moore, Ching, Boertzel & Lawlor, John E. Moore, Agana, Guam, for General Elec. Co.

ORDER RE DEFENDANT MONSANTO'S MOTION TO DISMISS Fed.R.Civ.P. 12(b)(2)

KELLER, District Judge, Sitting by Designation.

This is a class action suit involving 189 named plaintiffs who claim injury due to exposure to an allegedly toxic chemical manufactured by defendant Monsanto. Plaintiffs assert four causes of action against Monsanto: negligence and outrageous conduct, strict liability, breach of warranty and civil conspiracy. Presently, Monsanto moves the Court to dismiss the Complaint against it under Fed.R.Civ.P. 12(b)(2). Monsanto claims that it does not have the sufficient minimum contacts with the forum to support the exercise of personal jurisdiction. For the reasons which follow, the motion is DENIED.

BACKGROUND

On May 26, 1987, a hose on a 2000 kVA transformer at the Piti Power Plant on the United States Naval Base in Guam ruptured and emitted Polychlorinated Biphenyls (PCBs), allegedly contaminating the named plaintiffs and others in a purported class. The PCBs were manufactured by Monsanto. Monsanto had sold PCBs to General Electric (GE) by the railcar tank-load during the seventies and earlier. GE used PCBs in a dielectric solution as insulation in the transformers and other electrical devices. In 1949, GE sold the subject transformer to the Navy and delivered it to Guam equipped with insulation that included PCBs manufactured by the defendant Monsanto.

Before 1977, when PCB production was halted due to the determination that they were environmentally unsafe and posed potential health hazards, Monsanto had manufactured over a billion pounds of them. They were put into the stream of commerce through industrial buyers who, having used PCBs in their products, distributed them throughout the globe. All of Monsanto's distribution of PCBs into ultimate use was therefore indirect. Monsanto does not — because the nature of its business does not require it to — have retail or distribution outlets throughout the world or the nation.

Monsanto does not and never has had any direct contacts with Guam which relate to PCBs. While Monsanto used to distribute significant amounts of PCBs to GE, which was its largest purchaser, it has never had any direct distribution to Guam. Monsanto has never had any sales office there, has never advertised there, has never had any method of distributing its products there, and has never solicited any purchases there. Monsanto has never had an employee, agent, office, telephone or bank account in Guam. Furthermore, Monsanto has never sent an employee to Guam on any business-related activity nor has it specifically designed a product for use in Guam.

Monsanto's only contacts with Guam are unrelated to PCBs. In 1976 and 1977 Monsanto sold to Pan American Airways a hydraulic aviation fluid called Skydrol, which was delivered f.o.b. to Pan Am in the continental United States and used by Pan Am in Guam. Monsanto also is aware that fibers which it manufactured have made their way to Guam in Wear-Dated carpets. Monsanto also profits from the sale of a product called Roundup, an agricultural product distributed by Monsanto to a firm in Hawaii, Brewer Chemical, and through Brewer to Guam.

Despite its apparent lack of local contacts, Monsanto has a pervasive and world-wide presence. It is listed on seven stock exchanges and financially supported by sales throughout the world. Because Monsanto largely manufactures wholesale products, it has been able to advantage itself of the distribution capacity of its customers, like GE, who promote their products, with Monsanto components, directly to consumers.

DISCUSSION

Monsanto contends that this Court cannot exercise personal jurisdiction over Monsanto in Guam without running afoul of the Due Process clause of the United States Constitution. Plaintiffs take a contrary view in an argument directed less to contacts than to emotion. Monsanto is a corporate giant on seven stock exchanges; what injustice is it to hale them into Guam? They have already been sued in over 300 cases over PCBs and should be called to defend the integrity of their product in Guam. The law in this area, however, requires a systematic analysis of the contacts Monsanto maintains in determining whether the assertion of personal jurisdiction would be consistent with this Court's authority under Guam's long arm statute and the Due Process clause.

The Court's authority to exercise jurisdiction is governed by Guam Civil Code § 406.1. That statute permits the exercise of jurisdiction up to and including all that is constitutionally permissible. Constitutional jurisdiction is governed by Due Process. In turn, Due Process requires that a defendant have certain minimum contacts such that maintaining suit against it does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In practice, this results in the exercise of jurisdiction in two ways. A Court may exercise "general jurisdiction" where a defendant's activities in a state are "substantial," or "continuous and systematic," "regardless of the connection to the present litigation." Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 446-47, 72 S.Ct. 413, 418-19, 96 L.Ed. 485 (1952). A Court may alternatively exercise "limited," or "specific" jurisdiction, where the defendant's contacts with the forum, though limited, are sufficiently related to the cause of action. Each is discussed in turn.

General Jurisdiction

"Even if a cause of action is unrelated to the defendant's forum activities, jurisdiction may still be asserted if corporate activities within the forum are sufficiently substantial." Congoleum v. DLW Aktiengesellschaft, 729 F.2d 1240, 1241-42 (9th Cir.1984), citing Perkins v. Benguet, 342 U.S. 437, 446-47, 72 S.Ct. 413, 418-19, 96 L.Ed. 485 (1952). Contacts are "sufficiently substantial" when they are "systematic and continuous." Data Disc, Inc. v. Systems Tech. Assoc., 557 F.2d 1280, 1287 (9th Cir.1977). In Congoleum, the defendant moving for dismissal for lack of jurisdiction had numerous activities in California. These included the solicitation of orders, recommendation of other sales agents, ordering of samples, promotion of its products through mail and showroom displays, and attendance at trade shows. The Ninth Circuit held these activities insufficient to "make it reasonable and just to subject the corporation to the jurisdiction" of California. Congoleum, 729 F.2d at 1243, quoting Perkins v. Benguet, 342 U.S. at 445, 72 S.Ct. at 418.

In the present case, Monsanto has contacts with Guam only through third party intermediaries. Skydrol reached Guam through Pan Am, Roundup through Brewer Chemical, and Wear-Dated carpet through similar conduits. Monsanto has never had an office or presence in Guam whatsoever. There is, therefore, insufficient activity to support the exercise of general jurisdiction; it would be an uncontemplated extension of this Court's constitutional reach. See Congoleum, 729 F.2d at 1242 ("although many courts cite Perkins for the principle that personal jurisdiction may be asserted where the cause of action is unrelated to the forum activity, no court has ever held that the maintenance of even a substantial sales force within the state is a sufficient contact to assert jurisdiction in an unrelated cause of action").

Limited Jurisdiction

The exercise of limited jurisdiction is appropriate where the claims arise directly out of the party's activities in a forum state or territory. These are the minimum contacts contemplated in International Shoe for supporting jurisdiction, and the Ninth Circuit applies a three-part test for determining when its exercise is appropriate.

1. The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which it purposefully avails itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protection of its laws;

2. the claim must be one which arises out of or results from the defendant's forum related activities; and

3. the exercise of jurisdiction must be reasonable.

Data Disc. Inc. v. Systems Tech. Assoc., Inc., 557 F.2d at 1287.

In aiding the consideration of the last factor, "reasonableness," there are several relevant considerations: the extent of the purposeful interjection in the forum, the burden on defendant in going there, the danger of conflict with the sovereignty of a defendant's domicile, the forum state's interest in adjudicating the dispute, the most efficient judicial resolution of the controversy, the importance of the forum to plaintiff's interest in efficient relief, and the existence of an alternative forum. Sinatra v. National Enquirer, 854 F.2d 1191, 1199 (9th Cir.1988); Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1481 (9th Cir.1986). These factors are not rigid, mechanical tests as defendant urges them to be, but merely advisory; the list is not exhaustive. Id.; Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir.1981).

The Court is satisfied that the second and third prongs of the test are met. "But for" the existence of Monsanto's PCB's in Guam, there would be no claim. Thus, the claim certainly arises out of Monsanto's...