Llog Expl. Co. v. Fed. Flange, Inc., CIVIL ACTION NO. 17-2323 SECTION M (4)
| Decision Date | 27 August 2019 |
| Docket Number | CIVIL ACTION NO. 17-2323 SECTION M (4) |
| Parties | LLOG EXPLORATION COMPANY, L.L.C. v. FEDERAL FLANGE, INC., et al. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is a motion to dismiss for lack of personal jurisdiction filed by third-party defendant Silbo Industries, Inc. ("Silbo").1 Third-party defendant and third-party plaintiff CGP Manufacturing, Inc. ("CGP") opposes Silbo's motion to dismiss,2 and Silbo replies in further support of the motion.3 Also before the Court is a motion to dismiss for lack of personal jurisdiction filed by third-party and cross-defendant R.N. Gupta & Company, Ltd. ("Gupta").4 CGP and third-party plaintiff Federal Flange, Inc. ("Federal Flange") oppose Gupta's motion to dismiss,5 and Gupta replies in further support of the motion.6 Having considered the parties' memoranda and the applicable law, the Court denies the motions to dismiss for lack of personal jurisdiction. This Court's exercise of specific personal jurisdiction over Silbo and Gupta (collectively "Defendants") comports with federal due process under the stream-of-commerce doctrine.
This is a products liability case. Plaintiff LLOG Exploration Company, L.L.C. ("LLOG") is a Louisiana company "engaged in the exploration, development and production of oil and gas."7 LLOG operates two wells located off the Louisiana coast on the outer continental shelf in the Gulf of Mexico.8 In 2014, LLOG purchased four warrantied "6 x 6" target elbows from Federal Flange to install on its wells. The target elbows connected subsea piping at a 90-degree angle and maintained a flow path.9 While in use, the target elbows cracked due to alleged non-apparent manufacturing defects.10 LLOG shut down its operations to remove and replace the subsea target elbows which LLOG alleged resulted in millions of dollars of damage.11
The allegedly defective target elbows, originally manufactured as solid tee forgings (also known as shaped forgings or cushion tees, hereinafter "tees"), were imported or possessed by each of the parties in this case prior to LLOG's installing them on its wells. Gupta originally manufactured the tees, traceable by batch heat number H-3501, which were sold by Silbo to CGP, later machined, or hollowed out, by CGP, and then machine finished by Federal Flange into the target elbows at issue.12 Gupta is a foreign manufacturer and exporter of forgings, flanges, and general engineering component parts, with its principal place of business in Ludhiana, Punjab, India.13 Gupta's website publicizes that it exports its goods to the United States and that it manufactures forgings for various applications, including oil and gas.14 Gupta does not limit or restrict where sales or distribution of its products could be made in the UnitedStates.15 While Gupta does not market or advertise to Louisiana, its representatives have visited at least one Louisiana customer on three or four occasions over the course of approximately 20 years.16 Between 2010 and 2012, Gupta sold approximately $10.2 million of its goods directly to purchasers in Louisiana, including over $2.4 million in sales of tees (or 105,892 tees), through its U.S. importer, Silbo.17
Silbo is an importer and supplier of "various carbon and stainless-steel pipe, tubing, fittings, forgings, flanges and other steel products."18 Silbo is incorporated under the laws of Delaware, with its principal place of business in Montvale, New Jersey.19 While Silbo sources its products from various foreign manufacturers, Gupta is Silbo's only manufacturer of the tees at issue.20 Silbo sells goods nationwide and neither limits nor restricts the states to which it direct its sales.21 Silbo claims that it does not advertise directly to Louisiana, but its representatives visit and call on Louisiana customers on occasion to foster business relationships and attempt to increase sales.22 Silbo readily admits it has done "substantial business" in Louisiana.23 Between 2010 and 2012, Silbo sold over $16 million in goods directly to at least six different Louisiana customers, including over $3.6 million in sales of tees (or 121,586 tees).24 Although Gupta and Silbo's import-export relationship is non-exclusive, they maintain "a long-term business relationship" and consistently conduct business in Louisiana,25 including regulardistribution to at least one Louisiana customer, which Gupta representatives visited in Louisiana.26
In 2011, Gupta sold a bulk order of tees to Silbo, including the tees from heat number H-3501; Silbo then sold the tees to CGP, a Texas customer and manufacturer.27 Gupta delivered the tees directly to CGP at its principal place of business in Houston, Texas.28 In April 2014, Federal Flange ordered four target elbows from CGP, at which time CGP machined the tees bearing heat number H-3501 into target elbows and sold them to Federal Flange.29 Federal Flange is a supplier and manufacturer of pressure connectors with a principal place of business in Texas.30
In June 2014, Federal Flange machine finished the four target elbows for its customer LLOG.31 Before delivery, Federal Flange coordinated non-destructive testing on the four target elbows with G&S Non-Destructive Testing ("G&S") in Houston.32 After testing, Federal Flange delivered the target elbows to LLOG, which alleges discovering defects in the elbows after their installation on its wells.33
LLOG filed an action against Federal Flange for (1) breaches of express and implied warranties, (2) breach of contract, (3) breach of the Louisiana Products Liability Act, (4) redhibition, (5) negligence, and (6) detrimental reliance.34 Federal Flange filed a third-partycomplaint against CGP, G&S, and Gupta for indemnification or contribution.35 CGP filed a crossclaim against Gupta, and a third-party complaint against Silbo, for indemnification or contribution.36 LLOG settled and dismissed its claims against Federal Flange on February 19, 2019.37 Only third-party claims remain in this action.
Silbo filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.38 Silbo argues that it is not subject to general or specific personal jurisdiction in Louisiana, claiming it is not at home in Louisiana and none of its Louisiana contacts are related to the instant litigation.39 Silbo further argues that jurisdiction does not attach under a stream-of-commerce theory because: first, this theory did not survive the United States Supreme Court's ruling in Bristol-Myers Squibb v. Superior Court of California, 137 S. Ct. 1773 (2017); and, second, even assuming the theory remains viable, (i) the tees exited the stream upon their delivery to CGP in Texas, and (ii) Silbo did not expect, or have specific knowledge, that the imported tees would be distributed to a Louisiana end user.40
CGP opposes Silbo's motion to dismiss, arguing that Silbo is subject to specific personal jurisdiction under a stream-of-commerce theory. CGP states that Silbo imported the tees into a regular stream of commerce intending to serve as broad of a market as possible without restriction or limitation, aware that the stream may continue to an oil-and-gas-industry end userin Louisiana, where the stream did, in fact, deliver the allegedly defective tees, causing harm in the state.41
Gupta also filed a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction.42 Gupta's arguments mirror Silbo's, contending that Gupta is also not subject to general or specific personal jurisdiction in Louisiana and that, assuming the stream-of-commerce doctrine is viable, Gupta did not have the requisite awareness that its tees would wind up in Louisiana to give rise to personal jurisdiction.43
Federal Flange and CGP each oppose Gupta's motion on the same grounds that CGP opposed Silbo's motion, arguing that specific personal jurisdiction attaches under a stream-of-commerce theory, wherein Gupta could foresee a Louisiana end user and the regular stream did, in fact, deliver the tees to Louisiana where they allegedly caused harm.44
CGP and Federal Flange requested jurisdictional discovery in their opposition briefs.45 This Court ordered limited discovery primarily focused on whether Silbo or Gupta delivered the subject tees into the stream of commerce with an expectation or awareness that they would be purchased or used by consumers in Louisiana.46 Following discovery, the parties filed supplemental briefs reasserting their positions on Defendants' motions to dismiss.47 In CGP's supplemental brief opposing Silbo's motion, CGP outlined facts obtained through jurisdictional discovery regarding Silbo's Louisiana contacts and its knowledge about the nature of its sales and the market in Louisiana.48 Specifically, CGP contends that Silbo had substantial sales in Louisiana, including $3.6 million in sales of tees, between 2010 and 2012; that Silbo knew that itdid not sell to end users; that the tees Silbo imported from Gupta were used in the oil-and-gas industry; and that Louisiana is a known oil-and-gas market.49
In supplemental briefs opposing Gupta's motion, Federal Flange and CGP likewise outline Gupta's contacts with Louisiana and its knowledge about the nature of its exports and the Louisiana market.50 Specifically, Federal Flange and CGP note that Gupta made over $10.3 million in sales in Louisiana between 2010 and 2012; that Gupta knew Silbo sold Gupta's oil-and-gas utilized products directly to Louisiana customers; and that Gupta representatives visited one such customer in Louisiana.51 Further, Federal Flange and CGP contend that Gupta knew Louisiana to be an oil-and-gas industry leader and that Silbo did not sell its tees to end users.52
Federal Rule of Civil Procedure 12(b)(2) confers a right to dismissal of claims against a defendant where personal jurisdiction is lacking. Personal jurisdiction is "an essential...
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