Hanson v. John Blue Co., Div. of Burnley Corp.

• Decision Date: 17 June 1986
• Docket Number: No. C1-86-165,C1-86-165
• Citation: 389 N.W.2d 523
• Parties: Christian C. HANSON, et al., Respondents, v. JOHN BLUE COMPANY, a DIVISION OF BURNLEY CORPORATION, Appellant, and Lindsay Bros. Company, Respondent.
• Court: Minnesota Court of Appeals

Page 523

389 N.W.2d 523

Christian C. HANSON, et al., Respondents, v. JOHN BLUE COMPANY, a DIVISION OF BURNLEY CORPORATION Appellant and Lindsay Bros. Company, Respondent.

No. C1-86-165.

Court of Appeals of Minnesota.

June 17, 1986.

Review Denied Aug. 13, 1986.

Syllabus by the Court

Defendant does not have sufficient contacts with Minnesota to support long-arm jurisdiction.

John P. Clifford, Michael C. Snyder, Minneapolis, for Christian C. Hanson, et al.

John M. Kennedy, Jr., Marie A. Darst, Jardine, Logan & O'Brien, St. Paul, for John Blue Company, a Div. of Burnley Corp.

Joseph M. Stocco, David K. Wendel, Edina, for Lindsay Bros. Co.

Heard, considered, and decided by FOLEY, P.J., and WOZNIAK and LANSING, JJ.

OPINION

WOZNIAK, Judge.

John Blue Company appeals from an order of the District Court, Hennepin County, denying its motion to dismiss this action on the basis of lack of personal jurisdiction and forum non conveniens. We reverse, and remand with instructions to dismiss the action.

FACTS

The plaintiffs, Christian and Susan Hanson, are residents of Wisconsin. In 1981, Christian Hanson was doing some maintenance work on an ammonia applicator manufactured by defendant John Blue, Inc. when anhydrous ammonia unexpectedly shot into his left eye, causing severe injury. The plaintiffs commenced this action in the district court for Hennepin County, Minnesota against John Blue and Lindsay Brothers, Inc.

John Blue is a division of Burnley Corporation, a Delaware corporation. John Blue's principal place of business and main office are in Huntsville, Alabama. It is not licensed to do business in Minnesota and has no offices or sales outlets in the state. It has advertised in national publications, but has never engaged in advertising specifically calculated to reach Minnesota. Approximately three percent of its products eventually reach Minnesota.

John Blue manufactured the applicator in question and sold it to defendant Lindsay Brothers, Inc., a Minnesota corporation which sells agricultural equipment. Lindsay Brothers sold the applicator to Meyer Implement in Baldwin, Wisconsin. Meyer sold the applicator to an Ed Lemke, who subsequently traded it in at Knutson Implement in Hammond, Wisconsin. The plaintiffs purchased the product, in a used condition, from Knutson Implement.

The accident occurred in Wisconsin on May 19, 1981. The statutes of limitation in Wisconsin, Alabama, and Delaware have all expired. Minnesota is the only available forum.

ISSUE

Does defendant have sufficient minimum contacts with Minnesota to permit Minnesota courts to constitutionally exercise personal jurisdiction over it?

ANALYSIS

When personal jurisdiction is challenged, the burden is on the plaintiff to prove that sufficient contacts exist. Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (1976). The plaintiff need make only a prima facie showing of sufficient contacts through the allegations contained in the complaint and supporting affidavits, depositions, or other discovery evidence. Id. When reviewing an order denying a motion to dismiss for lack of jurisdiction, the plaintiffs' allegations are accepted as true. Hunt v. Nevada State Bank, 285 Minn. 77, 82-83, 172 N.W.2d 292, 296-97 (1969), cert. denied, 397 U.S. 1010, 90 S.Ct. 1239, 25 L.Ed.2d 423 (1970).

The Minnesota long-arm statute permits a state court to exercise personal jurisdiction:

over any foreign corporation or any non-resident individual * * * in the same manner as if it were a domestic corporation or he were a resident of this state. This section applies if, in person or through an agent, the foreign corporation or non-resident individual:

* * *

(b) Transacts any business within the state * * *.

Minn.Stat. Sec. 543.19, subd. 1 (emphasis added).

Plaintiffs allege jurisdiction exists under subdivision 1(b). There is no question that John Blue transacts some business in Minnesota. However, only causes of action "arising from" the acts enumerated in subdivision 1 may be asserted against a defendant when jurisdiction is based on the long-arm statute. See id., subd. 3. Here, the cause of action did not arise from the defendant's contacts with Minnesota. The cause of action arose from an accident in Wisconsin in which a Wisconsin resident was injured. The only nexus between the cause of action and defendant's contacts with Minnesota is that the product passed through Minnesota in the chain of distribution.

Moreover, John Blue's contacts with Minnesota do not satisfy the due process standard. Due process requires that there be sufficient "minimum contacts" between a nonresident defendant and the forum state so that requiring the defendant to defend itself in the forum state does not violate "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). This due process requirement is founded on two separate but related concerns: first, respect for state sovereignty and territoriality, see Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878); and second, more recently, fairness to the nonresident defendant. This second concern requires that defendant's contacts with the forum state be "such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). The Minnesota Supreme Court has stated that:

In World-Wide and [Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980) ], the United States Supreme Court attempted to slow the inexorable expansion of jurisdiction in state courts by underlining the significance of territoriality and de-emphasizing the relative importance of "fairness" to the defendant. These cases evidence a dramatic shift in the constitutional theoretical underpinnings of personal jurisdiction. After World-Wide and Rush, the critical focus in any jurisdictional analysis must be on "the relationship among the defendant, the forum and the litigation." Rush, 444 U.S. at 327, 100 S.Ct. at 576 (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977)).

West American Insurance Co. v. Westin, Inc., 337 N.W.2d 676, 678-79 (Minn.1983) (citations omitted).

Minnesota has adopted a five-factor test originally set out in Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.1965), to determine the sufficiency of a defendant's contacts with Minnesota:

An analysis of minimum contacts requires consideration of (1) the quantity of contacts, (2) the nature and quality of contacts, (3) the source and connection of those contacts to the cause of action, (4) the interest of the forum state, and (5) the convenience of the parties.

Dent-Air, Inc. v. Beech Mountain Air Service, Inc., 332 N.W.2d 904, 907 (Minn.1983). The first three factors are primary; the other two merit secondary consideration. Applying the Aftanase test to this case compels reversal of the trial court.

a. Quantity of contacts:

John Blue states in its affidavits that it has no office, sales outlet, agent for service of process, or similar contacts in Minnesota. It admits, however, that approximately three percent of its products, which are sold F.O.B., Huntsville, Alabama, eventually reach Minnesota.

The fact that John Blue ships its products F.O.B. Huntsville, Alabama does not preclude the exercise of jurisdiction by Minnesota. The

fairness requirement of due process does not extend so far as to permit a manufacturer to insulate itself from the reach of the forum state's long-arm rule by using an intermediary or by professing ignorance of the ultimate destination of its products.

DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 285 (3d Cir.), cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620 (1981), quoted in Rostad v. On-Deck, Inc., 372 N.W.2d 717, 721 (Minn.1985).

The quantity of contacts, standing alone, weighs in favor of jurisdiction. However, no one of the five factors is dispositive; the others must still be addressed. See Toro Co. v. Ballas Liquidating Co., 572 F.2d 1267 (8th Cir.1978).

b. Nature and quality of the contacts:

In reviewing the nature and quality of the contacts, this court attempts to ascertain whether the defendant "purposefully availed" itself of the benefits and protections of Minnesota law. Dent-Air, 332 N.W.2d at 907. This analysis entails consideration of the foreseeability of the product reaching the forum state and, more importantly, whether the defendant solicited business in the state or "was brought into contact incidentally through the unilateral activity of the plaintiff." Id.

Minnesota has adopted the "stream of commerce" theory of personal jurisdiction first enunciated by the United States Supreme Court in World-Wide Volkswagen. Under this theory, "[a] manufacturer who places its product in the stream of commerce in an effort to serve, directly or indirectly, markets in a jurisdiction is subject to suit in that jurisdiction * * *." Rostad, 372 N.W.2d at 721.

Thus, if the injury here had occurred in Minnesota, John Blue would be subject to our jurisdiction under the stream of commerce theory. However, the injury occurred in Wisconsin, to a Wisconsin resident. The World-Wide Volkswagen court stated in dicta:

Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others.

444 U.S. at 297-98, 100 S.Ct. at 567 (emphasis added).

Similarly, in Helten v. Arthur J. Evers Corp., 372 N.W.2d 380 (Minn.Ct.App.1985), pet. for rev. denied (Minn. Oct. 24, 1985), another products liability case, this...