Malone v. Stanley Black & Decker, Inc.

• Decision Date: 15 July 2020
• Docket Number: No. 19-3880,19-3880
• Parties: Kevin MALONE; Colleen Malone, Plaintiffs-Appellants, v. STANLEY BLACK & DECKER, INC., et al., Defendants, Rexon Industrial Corporation Limited, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

965 F.3d 499

Kevin MALONE; Colleen Malone, Plaintiffs-Appellants,

v.STANLEY BLACK & DECKER, INC., et al., Defendants,Rexon Industrial Corporation Limited, Defendant-Appellee.

No. 19-3880

United States Court of Appeals, Sixth Circuit.

Decided and Filed: July 15, 2020

Rehearing En Banc Denied August 17, 2020^*

ON BRIEF: Paul W. Flowers, Louis E. Grube, PAUL W. FLOWERS CO., L.P.A., Cleveland, Ohio, W. Craig Bashein, BASHEIN & BASHEIN CO., L.P.A., Cleveland, Ohio, for Appellants. Richard A. Schuster, Catherine Dowie, MATTHIESEN, WICKERT & LEHRER, S.C., Hartford, Wisconsin, for Appellee.

Before: MERRITT, GUY, and STRANCH, Circuit Judges.

OPINION

RALPH B. GUY, JR., Circuit Judge.

Kevin Malone injured his hand while using a table saw. He and his wife Colleen sued the saw's manufacturer and the other companies that brought the saw to market. The district court dismissed the claims against the manufacturer for lack of personal jurisdiction and the Malones now appeal. We vacate the judgment and remand.

I. BACKGROUND

According to the complaint, when Kevin Malone attempted to adjust the blade on his Craftsman table saw, "the guard came off the machine causing injury to his fingers." Malone was later "notified of a safety recall" on the saw. The Malones filed suit in an Ohio state court two years later, naming several Sears and Craftsman entities as defendants. They also named Rexon Industrial Corporation Limited, explaining that it "was and is a duly organized corporation and/or business association that engages in the business of manufacturing, marketing, distributing, sales, retail, renting and/or repairing of equipment, including table saws." Apart from this initial description, the rest of the complaint referred only to "the Defendants" generically.

Rexon is a Taiwanese company and thus removed the case to a federal district court in Ohio on the basis of diversity jurisdiction. Soon after, Rexon moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), asserting that the district court lacked personal jurisdiction. Rexon admitted that it manufactured the saw in question and conceded, for the purpose of its motion, that it had purposefully availed itself of the benefits and protections offered by the State of Ohio. Nevertheless, Rexon insisted that other jurisdictional requirements were lacking. The district court found some of those arguments misplaced, but ultimately agreed that it lacked personal jurisdiction and dismissed the case, leading to this appeal.¹

II. DISCUSSION

Personal jurisdiction falls into two categories: general and specific. Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). General jurisdiction exists when the defendant's affiliations with the forum state are "so ‘continuous and systematic’ as to render" the defendant "essentially at home" there. Id. (quoting Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). "Specific jurisdiction, on the other hand, depends on an ‘affiliation between the forum and the underlying controversy,’ principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Id. (quoting von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966) ) (alteration adopted).

The district court concluded that there was "no dispute as to the lack of general jurisdiction in this case," and thus focused only on specific jurisdiction. The Malones claim that there was and is such a dispute but "no case could be made for general jurisdiction because no discovery was permitted[.]" Whether discovery is permitted or not, the initial burden is on the plaintiff to make at least a prima facie showing of jurisdiction. Theunissen v. Matthews , 935 F.2d 1454, 1458 (6th Cir. 1991). On its face, the complaint makes no allegations supporting general personal jurisdiction. The Malones thus failed to carry their burden as to general personal jurisdiction.

We therefore turn our attention to specific personal jurisdiction. "A federal court sitting in diversity may not exercise jurisdiction over a defendant unless courts of the forum state would be authorized to do so by state law—and any such exercise of jurisdiction must be compatible with the due process requirements of the United States Constitution." Int'l Techs. Consultants, Inc. v. Euroglas S.A. , 107 F.3d 386, 391 (6th Cir. 1997). The state law at issue here is Ohio's long-arm statute, which permits a court to exercise personal jurisdiction only if "one of the enumerated bases" in the statute is satisfied. Conn v. Zakharov , 667 F.3d 705, 718 (6th Cir. 2012). Although the statute lists many bases, the Malones focus on only three. Under those bases, the district court had jurisdiction if any of the Malones’ causes of action arose from Rexon either (1) transacting business in Ohio; (2) contracting to supply services or goods in Ohio; or (3) causing tortious injury in Ohio by an act or omission outside the state if Rexon regularly does or solicits business in Ohio, or engages in any other persistent course of conduct there, or derives substantial revenue from goods used or consumed or services rendered there. See Ohio Rev. Code § 2307.382(A)(1), (2), (4).

The Malones argue that the third basis, subsection (A)(4), is the most fitting. In fact, they make no argument at all as to subsections (A)(1) or (A)(2). Nor did they make such arguments before the district court. Consequently, we deem any arguments as to those subsections forfeited and focus exclusively on subsection (A)(4). See Vander Boegh v. EnergySolutions, Inc. , 772 F.3d 1056, 1063 (6th Cir. 2014).

A. The Location of the Injury

The location of the injury is important. See Jackson v. State St. Bank & Tr. Co. , 110 Ohio App.3d 388, 674 N.E.2d 706, 710 (1996) ("A determination of long-arm jurisdiction under [§] 2307.382(A)(4) first entails a finding that the tortious injury occurred in Ohio."). The complaint, however, is vague on this point. Although it states that the saw "had been purchased in" Ohio, it does not explicitly say Kevin Malone was in Ohio when he suffered his injury. Rexon pointed this out in its motion to dismiss, but the district court did not address it directly. In discussing another point, however, the district court mentioned that "Plaintiff was injured in the forum state," and its analysis proceeded on that understanding. The Malones insist that was proper, because the place of the injury is a "logical inference" from the other allegations in the complaint. We proceed as the district court did and infer that the injury occurred in Ohio.

B. Contacts with the Forum State

In addition to the site of the injury, subsection (A)(4) also imposes requirements about the extent to which a defendant does business in Ohio. At the district court, the Malones acknowledged that they had not established precisely how much revenue Rexon earns from Ohio consumers, or how regular Rexon's business is, but they insisted that these deficits are precisely why they should be allowed to engage in limited discovery. The district court agreed that because of Rexon's "high volume of business activity" in Ohio, the Malones "could plausibly show, with additional discovery, that Rexon derived ‘substantial revenue’ from table saw sales in Ohio." The court declined to allow that discovery, however, because it believed the Due Process Clause prohibited the suit regardless. Neither party challenges the district court's conclusion as to the substantial revenue part of the long-arm statute and instead they both focus on the related requirements of the Due Process Clause. We will do the same.²

The overriding question before us is whether Rexon "possesses such minimum contacts with [Ohio] that the exercise of jurisdiction would comport with traditional notions of fair play and substantial justice." Beydoun v. Wataniya Rests. Holding, Q.S.C. , 768 F.3d 499, 505 (6th Cir. 2014) (relying on Int'l Shoe Co. , 326 U.S. at 316, 66 S.Ct. 154 ). Normally we consider three prongs in answering that question: (1) whether Rexon purposefully availed itself of the privilege of doing business in Ohio, (2) whether Rexon's activities in Ohio proximately caused the Malones’ injuries, and (3) whether the consequences caused by Rexon's actions were sufficiently connected to Ohio to make its courts’ jurisdiction reasonable. See id. at 507–08.

At the district court, Rexon admitted, for the purposes of its motion to dismiss, that the Malones "can satisfy the ‘purposeful availment’ prong of the specific jurisdiction test." Rexon's concession was based on its belief that the motion was "more easily decided under the second prong of the specific jurisdiction test." The company takes the same approach now.

Rexon's approach, however, makes our task harder, not easier. That is because the first and second prongs are related. Id. at 507 ("the analysis on the first prong ... involves some overlap with the analysis on the second prong"). We must first know how Rexon purposefully availed itself of Ohio's markets before we can determine whether its activities there proximately caused the Malones’ injuries. And the concession about the first prong was vague. Rexon conceded that its "[c]ontacts with Ohio" satisfy the purposeful-availment requirement, but failed to say what those contacts were or why they were satisfactory. In the later discussion on the causation prong, Rexon admitted that it manufactured, sold, and shipped the saw to Sears in California, but was quick to point out that none of those actions was directed at Ohio. If Rexon's relevant actions were making, selling, and shipping the saw, and such activities were insufficiently connected to Ohio, then the first prong, not the second, would be left unmet. In contrast, making, selling, and shipping a defective saw would seem to qualify as the proximate cause of the alleged injuries, thus...