Barone v. Rich Bros. Interstate Display Fireworks Co.

• Decision Date: 13 July 1994
• Docket Number: No. 93-1833,93-1833
• Citation: 25 F.3d 610
• Parties: Prod.Liab.Rep. (CCH) P 13,887 Bernard BARONE, an individual; Highland Country Club; Plaintiffs-Appellants; v. RICH BROS. INTERSTATE DISPLAY FIREWORKS CO., a South Dakota corporation; The People's Republic of China, a foreign corporation; China National Native Produce & Animal By-Products Import & Export Corporation, a Chinese corporation; Defendants; Hosoya Fireworks Co., Ltd., a foreign corporation; Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 610

25 F.3d 610

Prod.Liab.Rep. (CCH) P 13,887

Bernard BARONE, an individual; Highland Country Club Plaintiffs-Appellants; v. RICH BROS. INTERSTATE DISPLAY FIREWORKS CO., a South Dakota corporation; The People's Republic of China, a foreign corporation; China National Native Produce & Animal By-Products Import & Export Corporation, a Chinese corporation; Defendants Hosoya Fireworks Co., Ltd., a foreign corporation Defendant-Appellee.

No. 93-1833.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 15, 1993.

Decided May 24, 1994.

Rehearing and Suggestion for Rehearing

En Banc Denied July 13, 1994.

Michael G. Goodman, Omaha, NE, argued (Dan H. Ketcham, on the brief) for appellant.

Lyman L. Larsen, Omaha, NE, argued (David J. Schmitt, on the brief), for appellee.

Before LOKEN, Circuit Judge, HEANEY, Senior Circuit Judge, and HANSEN, Circuit Judge.

HEANEY, Senior Circuit Judge.

Bernard Barone was injured when a fireworks display he was helping to set up went awry. Barone and his employer, the Highland Country Club of Omaha, Nebraska, (collectively "Barone") sued the distributor which had sold Highland the fireworks, Rich Bros. Interstate Display Fireworks Co. of Sioux Falls, South Dakota, and two manufacturers of fireworks, one of which is Hosoya Fireworks Co. of Tokyo, Japan. ¹ Hosoya moved to dismiss for lack of personal jurisdiction, and the district court granted that motion. The district court refused to certify the question for appeal under 28 U.S.C. Sec. 1292(b), however, so Barone agreed to the dismissal of Rich Bros. without prejudice, thereby paving the way for a final judgment, which Barone has now appealed to this court.

I

The only facts of any significance are those that might be termed jurisdictional, i.e., those facts that would support the exercise of jurisdiction over Hosoya in the state of Nebraska. We note initially that Hosoya has no office in Nebraska, no agent for service of process, no distributor. It does not advertise in Nebraska, nor does it directly send any of its products into Nebraska. Its products are sold into Nebraska, however, as the facts of this case demonstrate, and it is the process by which those products arrive in Nebraska (and elsewhere throughout the United States) that concerns us in this background section.

Hosoya sells fireworks throughout the United States and elsewhere. ² During the years 1983-88 (the years immediately preceding the accident, which occurred on July 4, 1988), Hosoya utilized nine distributors in six states (California, Indiana, Missouri, Ohio, Pennsylvania, and South Dakota). Those nine American distributors annually purchased between a quarter of a million and a million dollars worth of fireworks (averaging $640,000 annually over the six-year period), which constituted between fifty-one and ninety-two percent (averaging just over seventy percent) of Hosoya's fireworks business.

Rich Bros. purchased just over $600,000 worth of fireworks from Hosoya during this period, averaging just over $100,000 annually. Michael Rich, president of Rich Bros., informs us that sixteen percent of the fireworks purchased from Hosoya were eventually resold into Nebraska, which totals approximately $100,000 worth of fireworks over the six-year period, or $16,000 annually.

Rich Bros. is not a roadside fireworks distributor, although a related company does distribute fireworks in that manner, but instead sells its fireworks displays through its six regional salesmen and through a catalog by mail. The six salesmen are located in Nebraska, Iowa, North Dakota, Montana, and South Dakota. The fireworks displays sold by Rich Bros. are intended for use by municipalities or organizations that put on fireworks displays. Many of its catalogs are sent, for example, to small town fire departments because its experience has been that those institutions are often responsible for the fireworks displays at various community celebrations.

Business was conducted between Hosoya and Rich Bros. in the following fashion: Hosoya would send price lists, purchase terms, and shipping information to Rich Bros. Hosoya also provided Rich Bros. with proof of compliance with various federal regulations. Although Hosoya disputes this, Rich informs us by affidavit that representatives of Hosoya visited him in his office in Sioux Falls for the purpose of soliciting the purchase of their fireworks.

II

We review dismissals for lack of personal jurisdiction de novo, and, like the district court, we simply look to the nonmoving party to make a prima facie showing of jurisdiction. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). Nebraska has construed its long-arm statute to confer jurisdiction to the limits of due process, see Keith v. Freiberg, 492 F.Supp. 65, 66-67 (D.Neb.) (citing Stucky v. Stucky, 185 N.W.2d 656 (Neb.1971)), aff'd, 621 F.2d 318 (8th Cir.1980), so our familiar two-part analysis in diversity cases of whether the forum state's long-arm statute is satisfied and, if so, whether the exercise of jurisdiction comports with due process, collapses into the single question of whether due process would be violated by the exercise of jurisdiction over Hosoya in this case. Soo Line R.R. Co. v. Hawker Siddeley Canada, Inc., 950 F.2d 526, 528 (8th Cir.1991). The necessary analysis may further be delineated by noting that this case requires us to take another look at a type of specific jurisdiction (as opposed to general jurisdiction, see Sondergard v. Miles, Inc., 985 F.2d 1389, 1392 (8th Cir.1993)), that has been labeled "stream of commerce." See Wines v. Lake Havasu Boat Mfg., Inc., 846 F.2d 40, 43 (8th Cir.1988).

Barone directs us to a Seventh Circuit decision, Giotis v. Apollo of the Ozarks, Inc., 800 F.2d 660 (7th Cir.1986), cert. denied, 479 U.S. 1092, 107 S.Ct. 1303, 94 L.Ed.2d 158 (1987), that appears to be on all fours with the case before us. In that case, Giotis was injured at a Fourth of July party in Wisconsin by fireworks that had been brought to the party by a Minnesotan, who had in turn purchased the fireworks by mail from a national distributor, Capitol Fireworks Company. (We note that fireworks were illegal in both Minnesota and Wisconsin at the time, but this apparently was no impediment to Capitol, which shipped the fireworks to a Minnesota address.)

The fireworks in question had been purchased by Capitol from either Apollo, a Missouri corporation with retail outlets in Missouri, or Red Rocket, a Missouri corporation with offices in Missouri and Louisiana. Red Rocket and Apollo distributed fireworks into ten and fifteen different states, respectively, but neither distributed fireworks into Wisconsin. There was no evidence in the record that either was aware of the scope of Capitol's sales efforts, see id. at 672 (Barker, J., concurring and dissenting), but the court nonetheless found that jurisdiction over both Red Rocket and Apollo comported with due process.

The due process clause requires that there be "minimum contacts" between the nonresident defendant and the forum state before the latter may exercise jurisdiction over the former. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980).

Sufficient contacts exist when the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there, and when maintenance of the suit does not offend traditional notions of fair play and substantial justice. In assessing the defendant's "reasonable anticipation," there must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

Soo Line, 950 F.2d at 528-29 (citations and internal quotation marks omitted).

The Giotis court held that when a seller, such as either Apollo or Red Rocket, heads a distribution network, thus "realiz[ing] the much greater economic benefit of multiple sales in distant forums, of which the purchase by the particular buyer who has brought suit is merely one example," its activities in that role may "satisfy the purposeful availment test" and it may therefore be sued by an injured buyer in the buyer's forum. 800 F.2d at 667. Although

[s]uch a seller, because of intervening levels of distribution, may not have mentally formed a purpose to sell its product to the particular individual buyer who is suing it, ... the seller surely has purposefully chosen to sell generally to buyers in the forum state and reaps the economic benefit of doing so. A seller at the head of a distribution network thus satisfies the requisite foreseeability of due process where it "delivers its products into the stream of commerce with the expectation that [these products] will be purchased by consumers in the forum state."

Id. (quoting Burger King v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985), which in turn quoted World-Wide Volkswagen, 444 U.S. at 297-98, 100 S.Ct. at 567-68). Apollo and Red Rocket were such sellers, in the Giotis court's opinion, in that they "derived the same economic benefits from Capitol's wide scope of sales efforts as Capitol did," and there was "no evidence that [they] were unaware of this scope." Id. at 668.

Applying the Giotis decision to this case is quick work, ³ if it represents the applicable law. Hosoya certainly benefited from the distribution efforts of Rich Bros., and although Hosoya claims to have had no actual knowledge that Rich Bros. distributed fireworks into Nebraska, such ignorance defies reason and could aptly be labeled "willful." ⁴ South Dakota is not a particularly populous state; Sioux Falls is conveniently located within short distance of three other states, and the very name of the distributor is "Rich Bros. Interstate Display Fireworks Co." In addition, the location of Hosoya's distributors suggests an effort...