Hunter v. Shanghai Huangzhou Elec. Appliance Mfg. Co.

• Decision Date: 07 December 2020
• Docket Number: 5:17-cv-00052 (BKS/TWD)
• Citation: 505 F.Supp.3d 137
• Parties: Meghan HUNTER, Individually and as Parent and Natural Guardian of MH; and MH, Plaintiffs, v. SHANGHAI HUANGZHOU ELECTRICAL APPLIANCE MANUFACTURING CO., LTD.; Shanghai Huangzhou Industry Co., Ltd. ; Quality Craft Home Décor, Inc.; Quality Craft Mergerco; Quality Craft, Ltd.; QCIL International, Inc.; Home Depot, USA, Inc.; The Home Depot, Inc.; and HD Development of Maryland, Inc., Defendants.
• Court: U.S. District Court — Northern District of New York

505 F.Supp.3d 137

Meghan HUNTER, Individually and as Parent and Natural Guardian of MH; and MH, Plaintiffs,

v.SHANGHAI HUANGZHOU ELECTRICAL APPLIANCE MANUFACTURING CO., LTD.; Shanghai Huangzhou Industry Co., Ltd. ; Quality Craft Home Décor, Inc.; Quality Craft Mergerco; Quality Craft, Ltd.; QCIL International, Inc.; Home Depot, USA, Inc.; The Home Depot, Inc.; and HD Development of Maryland, Inc., Defendants.

5:17-cv-00052 (BKS/TWD)

United States District Court, N.D. New York.

Signed December 7, 2020

For Plaintiffs: Timothy P. Murphy, Ryan M. Poplawski, Hancock Estabrook, LLP, 1800 AXA Tower I – 100 Madison Street, Syracuse, New York 13202.

For Defendants Quality Craft Home Décor, Inc., Quality Craft Mergerco, Quality Craft, Ltd., and QCIL International, Inc. (the "Quality Craft Defendants"): Marc H. Goldberg, Ryan A. Lema, Phillips Lytle, LLP, OMNI Plaza, 30 South Pearl Street, Albany, New York 12207.

For Defendants Home Depot, U.S.A., Inc., The Home Depot, Inc., and HD Development of Maryland, Inc. (the "Home Depot Defendants"): Steven W. Williams, Smith, Sovik, Kendrick & Sugnet, P.C., 250 South Clinton Street, Suite 600, Syracuse, New York 13202.

MEMORANDUM-DECISION AND ORDER

Hon. Brenda K. Sannes, United States District Judge:

I. INTRODUCTION

Currently before the Court is a renewed motion for default judgment under Rule 55(b) of the Federal Rules of Civil Procedure and Rule 55.2 of the Local Rules of Practice for the United States District Court for the Northern District of New York brought by Plaintiffs Meghan Hunter, individually and as parent and natural guardian of M.H., and M.H. (collectively, "Plaintiffs") against Defendants Shanghai Huangzhou Electrical Appliance Manufacturing Co., Ltd. ("Shanghai Huangzhou Electrical") and Shanghai Huangzhou Industry Co., Ltd. ("Shanghai Huangzhou Industry," and together with Shanghai Huangzhou Electrical, the "Shanghai Huangzhou Defendants") (Dkt. No. 151). The Home Depot and Quality Craft Defendants have filed partial oppositions to Plaintiffs’ renewed motion. (Dkt. Nos. 156-59). For the reasons set forth below, Plaintiffs’ motion is denied without prejudice.

II. RELEVANT PROCEDURAL BACKGROUND¹

On December 20, 2019, after obtaining a clerk's entry of default against the Shanghai Huangzhou Defendants for their "failure to appear, plead or otherwise defend" the action, Plaintiffs moved for default judgment against the Shanghai Huangzhou Defendants pursuant to Federal Rule 55(b) and Local Rule 55.2. (Dkt. No. 121). After reviewing Plaintiffs’ motion, the Court found that the Shanghai Huangzhou Defendants had been properly served with the Amended Complaint and had failed to timely answer or otherwise respond, and that Plaintiffs otherwise met the procedural requirements to obtain a default judgment. Hunter , 2020 WL 5258313, at *4, 2020 U.S. Dist. LEXIS 161142, at *9-11. However, the Court nonetheless denied the motion "for the fundamental reason that the Amended Complaint fails to allege facts sufficient for this Court to determine that it may exercise personal jurisdiction over the Shanghai Huangzhou Defendants." Id. at *5-9, 2020 U.S. Dist. LEXIS 161142, at *11-29 (analyzing personal jurisdiction over the Shanghai Huangzhou Defendants under New York's long-arm statute and federal due process standards, and finding that the Amended Complaint failed to allege any basis for personal jurisdiction over these Defendants). The Court also expressed concern about whether the Amended Complaint sufficiently stated a claim against the Shanghai Huangzhou Defendants as required for a default judgment, observing that:

[A]s with its jurisdictional allegations, the Amended Complaint's substantive allegations simply refer to "Defendants" as a group, without specifying any actions or omissions by the Shanghai Huangzhou Defendants, including their role in the allegedly tortious design, manufacture, assembly, marketing and sale of the Heater. (Dkt. No. 11, at 6-12). This failure to allege particularized facts regarding the Shanghai Huangzhou Defendants’ conduct would likely render it difficult for the Court to find that Plaintiffs have pled facts sufficient to state a claim against the Shanghai Huangzhou Defendants, were the Court to reach that question.

Id. at *10, 2020 U.S. Dist. LEXIS 161142, at *29. Finally, the Court noted that "Plaintiffs have not specified the amount of damages they seek, nor have they submitted affidavits or other documentary evidence from which the Court could determine an appropriate damages award." Id. , at *10, 2020 U.S. Dist. LEXIS 161142, at *30.

Observing that the "Court may consider evidence outside of the Complaint" in assessing whether it may exercise personal jurisdiction over the Shanghai Huangzhou Defendants, the Court offered Plaintiffs the opportunity to "renew their motion for default judgment by filing, within thirty days, evidence and briefing in support of this Court's personal jurisdiction over the Shanghai Huangzhou Defendants." Id. at *9, 2020 U.S. Dist. LEXIS 161142, at *28-29. The Court further instructed that, if they chose to renew their motion, Plaintiffs’ briefing should also "address which cause of action or causes of action in the Amended Complaint are sufficiently pled to state a claim against the Shanghai Huangzhou Defendants," as well as "the issue of damages." Id. at *10, 2020 U.S. Dist. LEXIS 161142, at *30.

On October 1, 2020, pursuant to the Court's instructions, Plaintiffs renewed their motion for default judgment by submitting a memorandum of law arguing that the Court may exercise personal jurisdiction over the Shanghai Huangzhou Defendants, along with supporting evidence. (Dkt. No. 151). Plaintiffs’ submission, however, did not include argument regarding the sufficiency of the amended complaint or Plaintiffs’ position regarding damages.²

On November 9, 2020, after reviewing Plaintiffs’ renewed motion, the Court issued a text order stating that, based on Plaintiff's proffered evidence, "the Court cannot determine the basis of personal jurisdiction, or the basis of liability, as to each individual defendant"³ and ordering that "Plaintiffs may supplement their motion with a letter brief and evidence by November 30, 2020." (Dkt. No. 162). On November 30, 2020, Plaintiffs submitted a supplemental attorney declaration with additional evidence responsive to the Court's text order. (Dkt. No. 163).

III. DISCUSSION

A. Personal Jurisdiction

In their renewed motion, Plaintiffs argue that the Court may exercise specific personal jurisdiction over the Shanghai Huangzhou Defendants. (Dkt. No. 151). "Specific [personal] jurisdiction exists when ‘a [forum] exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum.’ " O'Neill v. Asat Trust Reg. (In re Terrorist Attacks on September 11, 2001) , 714 F.3d 659, 673-74 (2d Cir. 2013) (quoting Metro. Life Ins. Co. v. Robertson-Ceco Corp. , 84 F.3d 560, 567-68 (2d Cir. 1996) (internal quotation omitted)). To evaluate whether it may exercise specific personal jurisdiction over a defendant, the Court first looks to whether it has a "statutory basis" for such jurisdiction under New York's long-arm statute, Troma Ent., Inc. v. Centennial Pictures Inc. , 729 F.3d 215, 218 (2d Cir. 2013), and then, "[i]f the long-arm statute permits personal jurisdiction, the second step is to analyze whether personal jurisdiction comports with the Due Process Clause of the United States Constitution." Chloe v. Queen Bee of Beverly Hills, LLC , 616 F.3d 158, 163 (2d Cir. 2010). In evaluating whether it has personal jurisdiction over the Shanghai Huangzhou Defendants, the Court may consider evidence outside of the complaint. See Vasquez v. Hong Kong & Shanghai Banking Corp., Ltd. , No. 18-cv-1876, 2020 WL 4586729, at *1 n.1, 2020 U.S. Dist. LEXIS 142607, at *2 n.1 (S.D.N.Y. Aug. 10, 2020).

Plaintiffs assert that N.Y. C.P.L.R. § 302(a)(3)(ii) gives the Court a statutory basis for specific personal jurisdiction over the Shanghai Huangzhou Defendants. (Dkt. No. 151, at 2). N.Y. C.P.L.R. § 302(a)(3)(ii) provides that a court "may exercise personal jurisdiction over any non-domicilary ... who in person or through an agent ... commits a tortious act without the state causing injury to person or property within the state ... if he ... expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce." With their initial renewed motion, Plaintiffs provided the following evidence in support of their argument: (1) an affirmation from Joanne Devost, Defendant Quality Craft, Ltd.’s Vice President of Operations, stating that, in 2010, the heater at issue in this litigation (the "Heater") was manufactured by "Shanghai Huangzhou Electrical," imported by Defendant Quality Craft Home Décor, Inc., and re-sold to the Home Depot Defendants, (Dkt. No. 151-1, at 3-18); (2) a sales history detail report from Defendant Quality Craft Home Décor, Inc. reflecting that, in 2010, Defendant Quality Craft Home Décor, Inc. sold more than 50,000 SOQC111-MBK heater units to the Home Depot Defendants, earning a total sales revenue of $1,783,094.53, (id. at 19-23); (3) an executive summary of one of Plaintiffs’ expert reports, which identifies specific alleged design and manufacturing defects with the Heater, (id. at 24-27); (4) purchase orders and associated shipping documents regarding 5 shipments of 730 SOQC111-MBK units (or 3,650 units total) from the Shanghai Huangzhou Defendants⁴ to a Home Depot distribution center in Montgomery, New York between August and October of 2010, (id. at 28-50); and (5) a page from the website of Shanghai Huangzhou Industry, which notes, among other things, that Shanghai Huangzhou Industry manufactures electric heaters and exports its products "all over the world," including to customers like "Home Depot, Menards, Sam's Club, Wal-mart, Target, etc.," and that it has "CSA...