Estate of Bank v. Swiss Valley Farms Co., No. CIV. JFM-02-3102.

• Decision Date: 30 September 2003
• Docket Number: No. CIV. JFM-02-3102.
• Citation: 286 F.Supp.2d 514
• Parties: ESTATE of Stephen BANK, et al. v. SWISS VALLEY FARMS, CO.
• Court: U.S. District Court — District of Maryland

Page 514

286 F.Supp.2d 514

ESTATE of Stephen BANK, et al. v. SWISS VALLEY FARMS, CO.

No. CIV. JFM-02-3102.

United States District Court, D. Maryland.

September 30, 2003.

Nathan I. Finkelstein, Bethesda, MD, Laurie B. Horvitz, Finkelstein and Horvitz, Bethesda, MD, for Edith Bank.

James J. O'Neill, III, Harold M. Walter, Tydings and Rosenberg, LLP, Baltimore, MD, for Swiss Valley Farms Co.

MEMORANDUM

MOTZ, District Judge.

This action has been brought by the Estate of Stephen Bank, et al. ("the Estate") against Swiss Valley Farms, Co. ("Swiss Valley"). Decedent Stephen Bank was an employee of Swiss Valley, Co., an Illinois corporation involved in the manufacture and distribution of dairy products. The Estate alleges various tort claims against Swiss Valley in connection with the alleged exposure of Mr. Bank to harmful chemicals during his employment.

Swiss Valley has filed a motion to dismiss for lack of personal jurisdiction, or in the alternative for failure to state a claim upon which relief may be granted. For the reasons stated below, this court holds that it cannot exercise personal jurisdiction over defendant. Pursuant to 28 U.S.C. § 1406, this case is transferred to the Southern District of Iowa.

I.

Defendant Swiss Valley employed Stephen Bank at two of its dairy laboratories in Iowa from 1981 to 1993. Following the culmination of his employment with Swiss Valley, Mr. Bank relocated to Maryland. Plaintiffs allege that during the term of his employment, Mr. Bank was repeatedly exposed to harmful chemicals, and contracted acute mylogeous leukemia as a result. Mr. Bank died on November 2, 2001, more than a year after being diagnosed with leukemia.

After Mr. Bank's death, his family learned that he had been exposed to hazardous chemicals during his tenure at Swiss Valley, and that other Swiss Valley employees who had worked in the same laboratories had also developed cancer. Plaintiffs have sued Swiss Valley alleging various tort claims arising out of the circumstances surrounding Mr. Bank's death.

Swiss Valley is an Illinois corporation with its principal place of business in Iowa. It has no resident agent in Maryland, maintains no employees in Maryland and is neither qualified nor registered to do business in Maryland. (Affidavit of S. Woodworth, Exhibit A to Defendant's Motion to Dismiss at ¶ 5, 18). Swiss Valley has never sold, and does not presently sell any products in the state of Maryland, nor has it otherwise transacted business in the state of Maryland. (Id. at ¶ 7, 10, 14). It has no place of business, offices, warehouses, branches, dealers or franchisees in Maryland. (Id. at ¶ 8). The entirety of the corporation's employment relationship with Mr. Bank transpired in Iowa.

Until early May 2003, Swiss Valley maintained a website which permitted the online sale of goods to consumers throughout the United States. This site was discontinued on May 1, 2003 allegedly due to lack of sales. (Second Affidavit of S. Woodworth, Exhibit A to Defendant's Reply Memorandum in Support of Motion to Dismiss at ¶ 3). Plaintiffs offer no statistics on the volume of business Swiss Valley transacted through the website, and no evidence of any sales to Maryland residents. Swiss Valley asserts that it has not made any sales to Maryland residents through the website or otherwise. (Id. at ¶ 1). In addition to its website, Swiss Valley maintains a toll-free hotline through which orders may be placed, and distributes its products in twenty-five states.¹

II.

When a defendant files a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of proving grounds for jurisdiction by a preponderance of the evidence. Mylan Laboratories, Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir.1993). This burden requires the plaintiff to produce competent evidence to sustain jurisdiction, including, for example, sworn affidavits. Nichols v. G.D. Searle & Co., 783 F.Supp. 233, 235 (D.Md.1992). If the jurisdiction issue is decided without a hearing, the plaintiff is required only to make a prima facie showing of jurisdiction. Mylan, 2 F.3d at 60.

In determining the existence of jurisdiction, the court should draw all "reasonable inferences" from the proof offered by the parties in the plaintiff's favor. Id. at 62. This does not mean, however, that the courts must "look solely to the proof presented by the plaintiff in drawing such inferences." Id. Rather, the court must consider "all relevant pleading allegations in the light most favorable to the plaintiff," and draw reasonable inferences therefrom. Id.

III.

"A federal court sitting in diversity jurisdiction may exercise personal jurisdiction over a non-resident defendant if (1) an applicable state long-arm statute confers jurisdiction and (2) the assertion of that jurisdiction is consistent with constitutional due process." Nichols, 991 F.2d at 1199. Constitutional due process requires that a non-resident defendant have sufficient minimum contacts "such that the maintenance of the suit does not offend traditional notions of fair play or substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).

The Estate relies on Section 6-103(b)(4) of Maryland's long arm statute to assert jurisdiction over Swiss Valley. Md.Code Ann., Cts. & Jud. Proc. § 6-103(b)(4). That section provides for jurisdiction over persons who

cause tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State.

The Maryland Court of Appeals has consistently held that the long-arm statute is co-extensive with the requirements of due process, and thus the first and second inquiries may be performed as one. Joseph M. Coleman & Associates, Ltd. v. Colonial Metals, 887 F.Supp. 116, 118 (D.Md.1995), Mohamed v. Michael, 279 Md. 653, 370 A.2d 551, 553 (1997).

Under due process analysis, there are two types of personal jurisdiction: specific and general. Specific jurisdiction is available when the plaintiff's claim arises out of the defendant's contacts with the forum state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). General jurisdiction is available only where the defendant's contacts with the forum state are "continuous and systematic." Id. at 415, 104 S.Ct. at 1872. The level of contacts required for the exercise of general jurisdiction is "significantly higher" than that required for the exercise of specific jurisdiction. ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir.1997).

The Estate's cause of action has not arisen from Swiss Valley's contacts with Maryland, and thus specific jurisdiction is not available. Moreover, plaintiffs do not assert that specific jurisdiction exists. General jurisdiction may be asserted however, if it can be shown that Swiss Valley has "continuous and systematic" contacts with Maryland. Helicopteros, 466 U.S. at 415, 104 S.Ct. at 1872.

Plaintiffs base their contention of general jurisdiction on Swiss Valley's operation of a website offering its products for sale.² Plaintiffs offer no evidence of any sales to Maryland residents via this website, but only suggest in the face of specific denials by defendant that such sales may have occurred, and occurred with such frequency that they provide the "continuous and systematic" contacts necessary for the exercise of general jurisdiction.³

In the context of personal jurisdiction, the Fourth Circuit has cautioned that "broad constructions of general jurisdiction should be generally disfavored." Nichols, 991 F.2d at 1200. In fact, with regard to non-residents, general jurisdiction is ordinarily reserved for those defendants who have such substantial contacts with the forum state that they may be considered "essentially domiciled" within that state. Atlantech Distribution, Inc. v. Credit Gen. Ins. Co., 30 F.Supp.2d 534 (D.Md.1998).

In light of this heightened standard, the Fourth Circuit has held that "limited advertising and solicitation" by a non-resident defendant in the forum state do not provide a sufficient basis for general jurisdiction. Ratliff v. Cooper Labs., Inc., 444 F.2d 745, 748 (4th Cir.1971). Without evidence of actual sales made to Maryland residents, it would seem that the operation of a website that merely offers the possibility of transacting cannot be characterized as anything more than "advertising and solicitation," and thus is equally insufficient for jurisdictional purposes.

The Fourth Circuit has deemed general jurisdiction absent in circumstances where the defendant possessed far more substantial contacts with the forum state than exist between Swiss Valley and Maryland. In Ratliff the defendant maintained five employees who resided in the forum state, promoted the company's products and occasionally took orders, and those contacts were deemed insufficient for general jurisdiction. Id. at 746. In Nichols, the court relied on Ratliff in finding general jurisdiction lacking where a pharmaceutical company maintained 17 to 21 employees in Maryland to perform advertising and solicitation functions, held meetings in Maryland three times a year, and accumulated annual revenue of between $9 and $13 million from its business in Maryland during a four year period. 991 F.2d at 1198, 1200. Finally, in ESAB Group, the court found no general jurisdiction even though the defendant had 26 customers who were residents of the forum state (representing 1% of all of its customers and .079% of gross annual sales) and defendant had purchased between $10,000 and $20,000 worth of parts from a supplier in the forum state. 126 F.3d at 621.

The increasing use of the Internet as a medium for business has introduced new...