Continental Research Corp. v. Reeves

• Decision Date: 30 April 1992
• Docket Number: No. A92A0709,A92A0709
• Citation: Continental Research Corp. v. Reeves, 419 S.E.2d 48, 204 Ga.App. 120 (Ga. App. 1992)
• Parties: , Prod.Liab.Rep. (CCH) P 13,269 CONTINENTAL RESEARCH CORPORATION v. REEVES, et al.
• Court: Georgia Court of Appeals

Page 48

419 S.E.2d 48

204 Ga.App. 120, Prod.Liab.Rep. (CCH) P 13,269

CONTINENTAL RESEARCH CORPORATION v. REEVES, et al.

No. A92A0709.

Court of Appeals of Georgia.

April 30, 1992.

Swift, Currie, McGhee & Hiers, Stephen L. Cotter, Jonathan M. Engram, Atlanta, for appellant.

Freeman & Hawkins, William H. Major III, Edwin L. Hall, Jr., Atlanta, for appellees.

BIRDSONG, Presiding Judge.

Appellant Continental Research Corporation (CRC) appeals from a judgment entered in favor of appellees in a products liability case involving inter alia allegations of improper labeling and a claim for loss of consortium, and from an order denying appellant's motion for new trial.

Appellee Ed Reeves, who specializes in heating, ventilation, air conditioning and refrigeration repair, was injured when he accidentally sprayed Con-Coil air conditioner cleaner inside a glove and got the product on his hands. Con-Coil contains a hydrofluoric acid and this fact was known to Mr. Reeves. Following the accident, Mr. Reeves read the warning label on the product, and promptly washed his hands and gloves with water; he also washed his hands thereafter repeatedly with soap and water. Mr. Reeves continued to work throughout the day and after a period of time, his hands became red and irritated. He went home and informed his wife of the incident. Mr. Reeves' condition worsened during the evening and his hands became increasingly painful notwithstanding various home remedies. Mrs. Reeves' concerns mounted. She read the label on the Con-Coil bottle and, remaining unsatisfied, called Poison Control. Mrs. Reeves was advised to take her husband for emergency medical treatment without delay. The local medical facility was unfamiliar with the nature of Mr. Reeves' injury and he was referred to a larger facility. Ultimately, he was injected with a medication used to counteract the hydrofluoric acid. Mr. Reeves sustained permanent damage to his hands.

The Con-Coil label did not specifically advise a person to seek medical treatment immediately if his skin came in contact with the product. Neither did the label warn the user that Con-Coil contains a fluoride ion which can cause the substance to penetrate the skin rapidly, and can result in severe injury below the outer skin surface without causing any visible burning, corrosion or damage to the surface of the skin. The need for these warnings was contested. The label did include, inter alia, a graphic. The lower diagonal of the graphic contained the word "CORROSIVE," and the top diagonal contained two pictorial representations, including a depiction of a hand being eaten away when coming into contact with a substance poured from a vial. The written label stated the product contained certain "HAZARDOUS MATERIAL," including hydrofluoric acid. It also warned that skin contact can cause severe burns, and to "wash thoroughly with water for both eyes and skin contact. Get medical aid if necessary." Additionally, the label stated, "it is not harmful to equipment (aluminum or cooper) when used as directed." Appellees in essence maintain that the label misled Ed Reeves and lulled him into failing to seek immediate medical attention, which would have prevented the permanent injury he sustained. Appellees introduced expert testimony that hydrofluoric acid could penetrate the skin and cause damage below the surface without being apparent to the person injured. The expert also testified that once contact occurred with hydrofluoric acid it was important to obtain immediate medical attention as the damage can be stopped only by the injection of calcium gluconate or other neutralizing substance; and, that while soap and water will neutralize the acid on the skin surface area to some extent, it cannot neutralize acid that has deeply penetrated and that does require specific emergency treatment. Although these contentions were strongly contested, the jury resolved contested issues of fact and rendered a verdict in favor of appellee/plaintiffs. Held:

1. Appellant, a foreign corporation, asserts it was not subject to personal jurisdiction of the court under the Long-Arm Statute of this state and for want of sufficient "minimum contact" to satisfy due process requirements. In resolving this jurisdictional issue, this court may consider all relevant evidence wherever located in the trial record.

At the time of his injury in Georgia, Ed Reeves lived and worked in Georgia; he and his wife subsequently moved to Texas to be close to her relatives. At the time of suit they were Texas residents. CRC is in the business of manufacturing chemical solvents which it sells to air conditioning wholesalers through manufacturers' representatives. CRC has no registered agent for service of process in Georgia, and has no office, no employees and no property in Georgia. The Con-Coil in question was purchased by Ed Reeves from a Baker Brothers store in Georgia. CRC apparently shipped the Con-Coil originally to its wholesale customer, Baker Brothers of Jacksonville, Florida. CRC officials were aware that Baker Brothers had six or more outlet stores in Georgia, and CRC was aware that Con-Coil would be sold in Georgia. In the normal course of business, CRC sells its products through manufacturer's representatives who are given a territory. One of those representatives had a territory that included the states of Georgia and Florida. Although CRC does not sell its product directly to individual users in Georgia, a CRC manufacturers' representative sells and promotes Con-Coil sales to customers in this state, and CRC receives the income from the sale of its products in Georgia. Products are shipped to wholesale customers by CRC and this includes shipments of products to customers in Georgia; however, title to the products transfers to customers at CRC's shipping dock in Dallas, Texas. Rather than billing the manufacturers' representative for products shipped, CRC invoices the customer and the customer pays CRC directly; CRC then pays the representative his commission. CRC does advertise in certain so-called national publications, but does not advertise in any publications that are exclusively for the Atlanta or Georgia area. CRC wants its product sold nationwide, including sales in Georgia, and it is not merely coincidental that its products are sold in this state. CRC manufacturers' representatives take steps to see that the product is sold in Georgia, and CRC instructs the representatives to take steps to so sell the product. CRC wants the manufacturers' representatives to sell as much of the product as they can in Georgia. CRC has gross sales of about $1,500,000; however, CRC sells less than three percent of the gross sales of its products in Georgia so its president does not consider shipments to be made regularly to the state. It may be reasonably inferred that as CRC sells less than three percent of its gross sales of products in Georgia, it perforce sells more than two percent of such gross sales in this state. Therefore, it may reasonably be concluded that CRC sold annually between $30,000-$45,000 worth of products in Georgia and, in our view, this would constitute "substantial revenue" from CRC goods used or consumed within this state, within the meaning of OCGA § 9-10-91(3).

The manufacturers' representative contract CRC entered with Mr. Dunbar in January of 1985 was to sell and promote CRC's products to wholesale distributors exclusively in a seven-state area, including both Florida and Georgia. CRC considers these manufacturers' representatives to be independent contractors who may represent other product lines as well and asserts it cannot tell them what to do or require them to give technical data sheets about Con-Coil to their wholesale customers. The representatives are paid a commission on all orders received within their territory whether submitted to CRC by the representative or submitted directly from an area distributor. The contract specified that representatives were independent contractors. It also provided the manner in which commissions would be determined, and granted the company the absolute right to set product prices and the terms governing the sales of CRC products.

Appellant asserts that it was not doing business in Georgia within the meaning of the Long-Arm Statute, OCGA § 9-10-91. OCGA § 9-10-91 pertinently provides: "A court of this state may exercise personal jurisdiction over any nonresident or his executor or administrator, as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he were a resident of the state, if in person or through an agent, he: ... (3) Commits a tortious injury in this state caused by an act or omission outside this state if the tort-feasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state...." (Emphasis supplied.) The Long-Arm Statute of this state contemplates that jurisdiction shall be exercised over nonresident parties to the maximum extent permitted by procedural due process. Coe, etc., Co. v. Wood-Mosaic Corp., 230 Ga. 58, 60, 195 S.E.2d 399. Regarding the term "agent" in OCGA § 9-10-91 and in the "minimum contact" context hereinafter discussed, "we are not ... dealing with the traditional 'principal-agency' theory of respondeat superior. We are concerned with whether a forum state may exercise personal jurisdiction over a nonresident defendant based upon the 'minimum contact' theory of International Shoe Co. v. State of Wash., 326 U.S. 310, 66 SC 154, 90 LE 95. '(W)ith the liberalization of the due process criteria [cit.], the jurisdictional distinction between agents and independent contractors has begun to fade. Courts treat persons who derive commission revenue [such as the manufacturers' representative in this case] not in terms of...