Juelich v. Yamazaki Mazak Optonics Corp., No. A03-174

• Decision Date: 24 June 2004
• Docket Number: No. A03-228., No. A03-174
• Citation: 682 N.W.2d 565
• Parties: James Donald JUELICH, Plaintiff, v. YAMAZAKI MAZAK OPTONICS CORPORATION, a/k/a Yamazaki Mazak Minokamo Corporation, defendant, Appellant, Mazak Nissho Iwai Corporation, defendant, Appellant, Gladwin Machinery & Supply Co., Defendant, Meikikou Corporation, defendant, Respondent, and Meikikou Corporation, Third Party Plaintiff, Respondent, v. Aries Precision Sheet Metal Company, Third Party Defendant.
• Court: Minnesota Supreme Court

682 N.W.2d 565

James Donald JUELICH, Plaintiff, v. YAMAZAKI MAZAK OPTONICS CORPORATION, a/k/a Yamazaki Mazak Minokamo Corporation, defendant, Appellant, Mazak Nissho Iwai Corporation, defendant, Appellant, Gladwin Machinery & Supply Co., Defendant, Meikikou Corporation, defendant, Respondent, and Meikikou Corporation, Third Party Plaintiff, Respondent, v. Aries Precision Sheet Metal Company, Third Party Defendant.

Nos. A03-174, A03-228.

Supreme Court of Minnesota.

June 24, 2004.

Cory Patrick Whalen, Wilbur W. Fluegel, Fluegel Law Office, Minneapolis, MN, for Appellant Juelich.

Blake William Duerre, Anton Johan Van Der Merwe, Arthur Chapman Kettering, Minneapolis, MN, for Respondent Yamazaki Mazak Optonics Corporation.

Carl Paul Carver, Kevin Patrick Curry, Minneapolis, MN, for Respondent Mazak Nissho Iwai Corporation.

Robert D. Brownson, Kristi Kay Warner, Brownson & Ballou, Minneapolis, MN, for Respondent Meikkou Corporation.

Heard, considered and decided by the court en banc.

OPINION

HANSON, Justice.

The issue presented in this case is similar to the one stated by the United States Supreme Court in its 1987 decision of Asahi Metal Industry Co. v. Superior Court of California as follows:

[W]hether the mere awareness on the part of a foreign defendant that the components it manufactured, sold, and delivered outside the United States would reach the forum State in the stream of commerce constitutes "minimum contacts" between the defendant and the forum State such that the exercise of jurisdiction "does not offend `traditional notions of fair play and substantial justice.'"

480 U.S. 102, 105, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). In Asahi, the Court answered this question against jurisdiction. Id. at 116, 107 S.Ct. 1026. Likewise, the court of appeals concluded that Minnesota's exercise of personal jurisdiction over respondent Meikikou Corporation (Meikikou) would violate the guarantee of due process provided by the United States Constitution. Juelich v. Yamazaki Mazak Optonics Corp., 670 N.W.2d 11, 19 (Minn.App.2003). We affirm the decision of the court of appeals, though on slightly different grounds.

Plaintiff James Donald Juelich was injured while providing maintenance to a scissor-lift table manufactured by Meikikou. He brought a personal injury/products liability action against Meikikou and appellants Yamazaki Mazak Optonics Corporation (YMO) (who manufactured the laser-cutting machine that included the table as a component part) and Mazak Nissho Iwai Corporation (MANI) (the international distributor for YMO of the laser-cutting machines).

Meikikou is a Japanese corporation who manufactured the scissor-lift table at its factory in Japan. Meikikou sold the table to Ishihara Shoji, Meikikou's Japanese distributor, in Japan. On instruction from Shoji, Meikikou delivered the table to Seiko Keisakusho in Japan, who delivered it to YMO in Japan. YMO used the table as a part of a laser-cutting machine, known as a "Super Turbo X510 System," that it manufactured in Japan. YMO then sold the system to YMO's Illinois subsidiary corporation, MANI, which was YMO's international distributor. MANI sold the system to Gladwin Machinery & Supply Company, a Minnesota supplier, and Gladwin sold the system to Aries Precision Sheet Metal Company, the Minnesota company that was Juelich's employer. MANI's service technician installed the equipment at Aries and trained Juelich and another employee in its operation.

MANI produced evidence that 122 YMO systems with Meikikou tables had been delivered in the United States, including 17 of them in Minnesota. There also was evidence that Meikikou knew that YMO intended to market the laser systems in the United States. On July 3, 2000, Meikikou employees met in Japan with representatives of YMO and Shoji to discuss YMO's sales of the laser systems in the United States. At the request of YMO, Meikikou provided English warning labels to be placed on the tables by YMO once the tables were installed in the YMO laser-cutting machine. Meikikou also provided YMO an operations manual in Japanese that was to be used by YMO in preparing an English manual for the system. Meikikou was not involved in preparing the English manual.

There was also evidence that Meikikou maintains an English language website that features Meikikou as a world player in the scissor-lift table field. The website identifies Meikikou's domestic and international "associated" companies, including four in the United States. The website focuses primarily on a description of Meikikou as a corporation and only slightly on a description of its products. It does not contain any mechanism for ordering products. Meikikou does not otherwise direct any advertising to Minnesota businesses. Meikikou is a member of two international business groups, is ISO¹ certified, and maintains worldwide insurance coverage.

Meikikou answered Juelich's complaint and raised lack of personal jurisdiction as an affirmative defense. Meikikou then served a cross-claim against Gladwin and a third-party claim against Aries. Both YMO and MANI asserted cross-claims against Meikikou.

Meikikou moved to dismiss Juelich's complaint and YMO and MANI's cross-claims for lack of personal jurisdiction. That motion was based on the unsworn affidavit of Tsutomu Odaguchi, Meikikou's Managing Director and General Manager of Development. The district court first ordered Meikikou to answer interrogatories and to produce Odaguchi for his deposition. After the deposition, Meikikou provided excerpts of Odaguchi's testimony to the court. Odaguchi testified that Meikikou has no involvement with the scissor-lift tables once they are delivered to Seiko in Japan; that Meikikou does not sell scissor-lift tables to United States customers directly; that Meikikou sells its products only to Japanese companies, some of which incorporate components obtained from Meikikou into their own products and then sell them overseas; that Meikikou produces English warning labels for its Japanese customers but only Japanese language operations manuals; and that, whenever YMO alerted Meikikou that it intended to sell the finished product in another country, Meikikou would follow YMO's instructions to install safety valves or comply with other specifications particular to that country.

After receiving excerpts from Odaguchi's deposition, the district court granted Meikikou's motion to dismiss.² Juelich filed a notice of appeal and YMO and MANI filed joint appeals. The court of appeals affirmed the district court. The court of appeals concluded that Asahi "clarified the stream-of-commerce theory," quoting from Justice O'Connor's plurality opinion that the "placement of a product into a stream of commerce, without more, is not an act of the defendant purposely directed toward the forum State." Juelich, 670 N.W.2d at 18 (quoting Asahi, 480 U.S. at 112, 107 S.Ct. 1026.). YMO and MANI petitioned this court for further review. Juelich settled all of his claims with YMO and MANI and did not seek further review. Thus, the only claims against Meikikou that remain in this action are the cross-claims of YMO and MANI.

I.

Whether personal jurisdiction exists is a question of law which we review de novo. V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn.1996). Once jurisdiction has been challenged by the defendant, the burden is on the plaintiff to prove that sufficient contacts exist with the forum state. Dent-Air, Inc. v. Beech Mountain Air Service, Inc., 332 N.W.2d 904, 907 n. 1 (Minn.1983). At the pretrial stage, however, the plaintiff's allegations and supporting evidence are to be taken as true. Id. (citing Hardrives, Inc. v. City of LaCrosse, Wisconsin, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (1976)).

Minnesota's long-arm statute, Minn.Stat. § 543.19 (2002), permits Minnesota courts to assert personal jurisdiction over defendants to the full extent of federal due process. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410 (Minn. 1992). Due process requires that the defendant have "certain minimum contacts" with the forum state³ and that the exercise of jurisdiction over the defendant does not offend "traditional notions of fair play and substantial justice." Burnham v. Superior Court of Cal., 495 U.S. 604, 618, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990) (quoting Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154).

Minnesota's Five-Factor Test

In Minnesota, a five-factor test has been used to determine whether the exercise of personal jurisdiction over a foreign defendant is consistent with due process. Hardrives, Inc., 307 Minn. at 294, 240 N.W.2d at 817 (citing Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir. 1965)). This test requires the court to evaluate:

(1) the quantity of contacts with the forum state;

(2) the nature and quality of those contacts;

(3) the connection of the cause of action with these contacts;

(4) the interest of the state providing a forum; and

(5) the convenience of the parties.

Id.

The first three factors determine whether minimum contacts exist and the last two factors determine whether the exercise of jurisdiction is reasonable according to traditional notions of fair play and substantial justice. Although distinct, there is an interplay between the minimum contacts factors and the reasonableness factors because they all trace their origin to the holding of International Shoe, that a court cannot subject a person to its authority where maintenance of the suit would offend "traditional notions of fair play and substantial justice." 326 U.S. at 316, 66 S.Ct. 154. The First Circuit Court of Appeals has described this interplay as follows:

We think * * * the reasonableness prong of the due process inquiry evokes a sliding scale: the weaker the plaintiff's

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