Align Corp. v. Allister Mark Boustred & Horizon Hobby, Inc.

• Decision Date: 13 November 2017
• Docket Number: Supreme Court Case No. 16SC448
• Citation: 405 P.3d 1148
• Parties: ALIGN CORPORATION LIMITED, Petitioner, v. Allister Mark BOUSTRED and Horizon Hobby, Inc. d/b/a Horizon Hobby, Respondents.
• Court: Colorado Supreme Court

405 P.3d 1148

ALIGN CORPORATION LIMITED, Petitioner,

v.Allister Mark BOUSTRED and Horizon Hobby, Inc. d/b/a Horizon Hobby, Respondents.

Supreme Court Case No. 16SC448

Supreme Court of Colorado.

November 13, 2017

CHIEF JUSTICE RICE delivered the Opinion of the Court.

¶ 1 This case requires us to examine the stream of commerce doctrine and to determine the prerequisites for a state to exercise specific personal jurisdiction over a non-resident defendant.¹ We conclude that World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), sets out the controlling stream of commerce doctrine. This doctrine establishes that a forum state may assert jurisdiction where a plaintiff shows that a defendant placed goods into the stream of commerce with the expectation that the goods will be purchased in the forum state. Applying this doctrine to the case before us, we conclude that the plaintiff made a sufficient showing under this doctrine to withstand a motion to dismiss.

I. Facts and Procedural History

¶ 2 In 2012, Respondent Allister Mark Boustred, a Colorado resident, purchased a replacement main rotor holder for his radio-controlled helicopter from a retailer in Fort Collins, Colorado. The main rotor holder was allegedly manufactured by Petitioner Align Corporation Limited ("Align"), a Taiwanese corporation, and distributed by Respondent Horizon Hobby, Inc. ("Horizon"), a Delaware-based corporation. Align has no physical presence in the United States, but it contracts with U.S.-based distributors to sell its products to retailers who, in turn, sell them to consumers. At the time of the incident at issue here, Align sold its products throughout the United States through four U.S.-based distributors, including Horizon.

¶ 3 Boustred installed the main rotor holder to his helicopter and was injured in Colorado when the blades held by the main rotor holder released and struck him in the eye. He filed claims of strict liability and negligence against both Align and Horizon in Colorado.

¶ 4 Align filed a motion to dismiss Boustred's claims on the ground that Colorado lacked personal jurisdiction over it. The district court denied the motion, concluding that Boustred had made a prima facie showing of personal jurisdiction under Colorado's long-arm statute and the U.S. Constitution. In support of this determination, and resolving any controverted facts in favor of Boustred, the district court found that Boustred's "allegations and supporting documents show that Align injected a substantial number of products into the stream of commerce knowing that those products would reach Colorado" and that Align "took steps to market its products in the U.S. and Colorado." The district court also noted that Boustred's allegations were "supported by documents that purportedly show that Align provided marketing materials to its distributors, attended trade shows in the U.S. where Align actively marketed its products, and established channels through which consumers could receive assistance with their Align products." The district court further determined that jurisdiction over Align was reasonable both because Align would suffer no greater burden in defending this suit in Colorado than it would in any other U.S. forum and because Colorado has a substantial interest in protecting its residents from faulty products.

¶ 5 Align then asked the district court to certify the personal jurisdiction question for interlocutory appeal under C.A.R. 4.2, and the district court granted the motion. A division of the court of appeals accepted jurisdiction and affirmed the district court's ruling. Boustred v. Align Corp. Ltd., 2016 COA 67, ¶¶ 1-2, ___ P.3d ___. Align argued that the district court's ruling ignored J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011). However, the division determined that the plurality opinion of J. McIntyre was not binding on Colorado courts and that instead Justice Breyer's narrower concurrence controlled. See Boustred, ¶¶ 23-24. Interpreting that concurrence and the concurrence in Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), the division held that the U.S. Supreme Court's decision in World-Wide Volkswagen remains the prevailing law articulating the stream of commerce doctrine. Boustred, ¶ 23. Applying that doctrine, the division agreed with the district court that Boustred had made a sufficient prima facie showing of Colorado's specific personal jurisdiction over Align. See id. at ¶¶ 24, 27.

¶ 6 Align appealed, and we granted certiorari.

II. Analysis

¶ 7 This case presents the first opportunity for this court to address the impact of two U.S. Supreme Court plurality opinions — Asahi and J. McIntyre — on Colorado's stream of commerce jurisprudence. We begin by reviewing the law of personal jurisdiction generally and its application in stream of commerce cases specifically. We consider the three primary U.S. Supreme Court cases exploring the stream of commerce doctrine — World-Wide Volkswagen, Asahi, and J. McIntyre — and conclude that World-Wide Volkswagen remains the controlling precedent. Next, we apply the stream of commerce doctrine to the case before us and conclude that Boustred made a sufficient showing under this doctrine to withstand a motion to dismiss.

A. Standard of Review

¶ 8 "Whether a court may exercise personal jurisdiction over a defendant is a question of law, which we review de novo." Griffith v. SSC Pueblo Belmont Operating Co. LLC, 2016 CO 60M, ¶ 9, 381 P.3d 308, 312, as modified on denial of reh'g (Oct. 17, 2016). Similarly, when a court addresses a motion to dismiss based solely on documentary evidence, we review de novo whether a plaintiff established a prima facie case of personal jurisdiction necessary to defeat a motion to dismiss. Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1192 (Colo. 2005). In doing so, we review the documentary evidence de novo. Id. at 1195.

B. Personal Jurisdiction

¶ 9 For a Colorado court to exercise jurisdiction over a non-resident defendant, the court must comply with Colorado's long-arm statute and constitutional due process. Id. at 1193. Colorado's long-arm statute confers "the maximum jurisdiction permitted by the due process clauses of the United States and Colorado constitutions." Id. (citing Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267, 1270 (Colo. 2002)); see also U.S. Const. amend. XIV; Colo. Const. art. II, § 25; § 13-1-124, C.R.S. (2017). Therefore, we engage in a constitutional due process analysis to determine whether a Colorado court may exercise jurisdiction over a non-resident defendant. Magill v. Ford Motor Co., 2016 CO 57, ¶ 14, 379 P.3d 1033, 1037, reh'g denied (Oct. 3, 2016).

¶ 10 The due process clauses of the United States and Colorado constitutions operate to limit a state's exercise of personal jurisdiction over non-resident defendants. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Keefe, 40 P.3d at 1270. Specifically, due process requires that a non-resident corporate defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 S.Ct. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 S.Ct. 278 (1940)). "The quantity and nature of the minimum contacts required depends on whether the plaintiff alleges specific or general jurisdiction." Archangel, 123 P.3d at 1194. Here, because no party asserts that Align is subject to general jurisdiction, we discuss only specific jurisdiction.

¶ 11 "Specific jurisdiction is properly exercised where the injuries triggering litigation arise out of and are related to `activities that are significant and purposefully directed by the defendant at residents of the forum.'" Id. (quoting Keefe, 40 P.3d at 1271). To determine whether the defendant has sufficient minimum contacts, we consider "(1) whether the defendant purposefully availed himself of the privilege of conducting business in the forum state, and (2), whether the litigation `arises out of' the defendant's forum-related contacts." Id.

¶ 12 The "purposeful availment" requirement precludes personal jurisdiction resulting from random, fortuitous, or attenuated contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The "arising out of" requirement mandates that "the actions of the defendant giving rise to the litigation must have created a `substantial connection' with the forum state." Archangel, 123 P.3d at 1194 (quoting Keefe, 40 P.3d at 1271).

¶ 13 Once it is established that a defendant has the requisite minimum contacts, "these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Keefe, 40 P.3d at 1271 (quoting Burger King, 471 U.S. at 476, 105 S.Ct. 2174). These "fairness factors" include the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and/or the shared interest of the several states in furthering fundamental substantive social policies. World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. 559.

C. Personal Jurisdiction in Stream of Commerce Cases

¶ 14 The U.S. Supreme Court first addressed the minimum contacts analysis in the context of non-resident manufacturers in World-Wide Volkswagen. There, the Court held that a "forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with...