Moore v. Little Giant Industries, Inc., Civ. A. No. 80-431.

• Decision Date: 14 May 1981
• Docket Number: Civ. A. No. 80-431.
• Citation: 513 F. Supp. 1043
• Parties: Leslie H. MOORE, Jr., Betty B. Moore, Plaintiffs, v. LITTLE GIANT INDUSTRIES, INC., a Utah Corporation, Defendant.
• Court: U.S. District Court — District of Delaware

513 F. Supp. 1043

Leslie H. MOORE, Jr., Betty B. Moore, Plaintiffs, v. LITTLE GIANT INDUSTRIES, INC., a Utah Corporation, Defendant.

Civ. A. No. 80-431.

United States District Court, D. Delaware, Wilmington Division.

May 14, 1981.

COPYRIGHT MATERIAL OMITTED

John P. Daley, Wilmington, Del., for plaintiffs.

Richard R. Wier, Jr., Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for defendant.

OPINION

CALEB M. WRIGHT, Senior District Judge.

In this diversity case, the nonresident defendant has moved to have the action dismissed for lack of in personam jurisdiction, pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. In the event that the Court finds jurisdiction, it moves for transfer of the action pursuant to 28 U.S.C. § 1404(a), or a stay of the action pending resolution of a similar action in the Utah state courts. In deciding whether it has personal jurisdiction over the defendant, the Court confronts several novel legal issues under Delaware's long-arm statute, 10 Del.C. § 3104. The Court concludes that a manufacturer who ships goods into Delaware is within the Court's jurisdiction under the statute; that exercise of jurisdiction is not barred by the Due Process Clause; and that neither transfer nor a stay is warranted.

I. Factual Background

This case is a products liability action in which plaintiffs Leslie and Betty Moore seek damages against defendant Little Giant Industries, Inc. ("Little Giant") for injuries sustained by Leslie Moore while using a ladder manufactured by Little Giant. Plaintiffs allege that defendant was negligent in the design and manufacture of the ladder, and that defendant breached an implied warranty of merchantability. Jurisdiction is asserted under 28 U.S.C. § 1332; plaintiffs are residents of Delaware and defendant is a Utah corporation with its principal place of business in Utah.

The circumstances surrounding the purchase of the ladder are of critical importance to the issue of jurisdiction. The Court finds the following facts, on the basis of the affidavits and other supporting materials filed by the parties. In February 1979, Leslie Moore attended a trade show in Minnesota at which defendant and a number of other manufacturing concerns had sales booths. He was given literature describing a special offer on Little Giant ladders, which provided that customers who purchased ladders at the show would get "free freight." Plaintiff bought and made payment on a ladder while at the show, and indicated on the purchase order that defendant should ship the ladder to plaintiff's Delaware address. The purchase order was approved at defendant's home office in Utah, and defendant shipped the ladder to Delaware by common carrier, f. o. b. Utah.

It is undisputed that Little Giant has no employees, agents, or offices in Delaware, does no advertising there, and has made no other shipments to the state.

II. Legal Issues

Defendant's motions for dismissal, transfer, or stay of the action will be considered in turn.

A. Motion to Dismiss for Lack of Jurisdiction

Determining whether this Court has jurisdiction over defendant involves a two-step analysis. The Court must first determine whether the Delaware long-arm statute, 10 Del.C. § 3104, provides for jurisdiction in this case, a question of statutory construction. If the Court finds that it does, then the Court must decide whether exercise of that jurisdiction would offend the Due Process Clause of the Fourteenth Amendment. See, e. g., Beaty v. M.S. Steel Co., 401 F.2d 157, 159 (4th Cir. 1968).

1. Delaware Long-Arm Statute

The Delaware long-arm statute, like other statutes modelled on the Uniform Interstate and International Procedure Act, sets out a number of grounds on which jurisdiction can be asserted. In relevant part, the statute provides as follows:

As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or his personal representative, who in person or through an agent:

(1) Transacts any business or performs any character of work or service in the State;

(2) Contracts to supply services or things in this State;

(3) Causes tortious injury in the State by an act or omission in this State;

(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State; ....

10 Del.C. § 3104(c). Plaintiffs seek to premise jurisdiction in this case on subsections (c)(1), (2), and (3); it is conceded, as it must be, that subsection (c)(4) does not apply here.

Plaintiffs suggest that subsection (c)(1) may support their claim of jurisdiction, on the basis that defendant "transacted business" in Delaware. The contract was executed elsewhere, and performed substantially, if not entirely, out-of-state. Though this subsection is to be construed expansively, see Wilmington Supply Co. v. Worth Plumbing & Heating, Inc., 505 F.Supp. 777, 780 (D.Del.1980), it does not confer jurisdiction over the defendant in this case. Neither the solicitation, the filing of the purchase order, nor the payment occurred when either party was in Delaware. The only contact with Delaware was defendant's shipment of the ladder into the state. Shipment of goods into a state by common carrier, without more, does not constitute "transaction of business." See, e. g., Pennington v. Toyomenko, Inc., 512 F.2d 1291 (5th Cir. 1975). The Court holds, therefore, that subsection (c)(1) does not apply.

Plaintiffs also contend, half-heartedly, that subsection (c)(3) might confer jurisdiction. The Court finds no support for this position. The "acts and omissions" that allegedly led to plaintiff's tortious injuries pertain to the design and manufacture of the ladder. See Complaint ¶ 9. It is undisputed that all activities involving the ladder's design and manufacture took place in Utah. Plaintiffs' suggestion that the "tortious act" should be deemed to have occurred where the injury took place would eviscerate the distinction between subsections (c)(3) and (c)(4) of the statute, and must therefore be rejected under generally-accepted principles of statutory construction. See Mergenthaler v. State, 239 A.2d 635 (Del.1968).

Plaintiffs rely most heavily on subsection (c)(2), arguing that defendant is within the Court's jurisdiction because it "contracted to supply ... things" in Delaware by undertaking shipment of the ladder. As the state courts have yet to construe this subsection of the statute, this Court must interpret the provision as it anticipates the state courts would. See Wilmington Supply Co., supra at 779.

Subsection (c)(2) would seem, on its face, to apply in this case, in that defendant does not dispute that, as part of its contract with Moore, it agreed to ship the ladder to him in Delaware and to assume the freight costs. Defendant makes three independent arguments as to why subsection (c)(2) should be held not to apply here. First, defendant notes that because shipment was made f. o. b. Utah, the contract was completely performed in Utah, at the point defendant delivered the ladder to the common carrier, see U.C.C. § 2-206(1)(b), and that title passed to the buyer then, see U.C.C. § 2-401(2)(a). In the Court's view, however, that does not settle the question whether, for purposes of the long-arm statute, defendant "contracted to supply things" in Delaware. Given that the defendant undertook to ship the ladder and assumed the shipment costs, the Court rejects as hypertechnical any reading of subsection (c)(2) as inapplicable here because the ladder was sent f. o. b.

Second, defendant contends that subsection (c)(2) is inapplicable to the instant case because the case fits within subsection (c)(4), which addresses personal injury cases involving diverse parties. Defendant argues that under the rules of statutory construction, subsection (c)(4) controls the other, more general subsections of the statute with regard to jurisdiction in this case. On this reasoning, if plaintiff cannot establish jurisdiction under subsection (c)(4), he is precluded from doing so under subsection (c)(1), (2), or (3). The argument fails, however, because some overlap was intended between the jurisdictional bases set out in § 3104(c), as the legislative history makes clear. Insofar as the Delaware long-arm statute was closely modelled on the Uniform Interstate and International Procedure Act, see Eudaily v. Harmon, 420 A.2d 1175 at 1176 (Del.1980), the Court may look to the Commissioners' Comments on the Act in determining how to interpret the law, see Wilmington Supply Co., supra at 780. The relevant Comment states that the enumerated bases of jurisdiction were not intended to be mutually exclusive:

Each of the subdivisions in subsection (c) will independently support jurisdiction. In some instances, a jurisdictional basis may be found under more than one subdivision. Thus, a defendant's liability may arise under subdivision (1) "transacting business" and either subdivision (3) "causing tortious injury by an act or omission in this state" or subdivision (4) "causing a tortious injury in this state by an act or omission outside this state."

Comment to § 1.03(a) of Uniform Interstate and International Procedure Act. Thus, it is not inconsistent with the intent of the draftsmen to apply (c)(2) in a case in which (c)(4) might also have applied. To the extent that Hill v. Morgan Power Apparatus Corp., 259 F.Supp. 609, 611 (E.D.Ark.1966), aff'd, 368 F.2d 230 (8th Cir. 1966) (construing same subsection of Arkansas long-arm statute) is to the contrary, the Court is unwilling to follow that decision.

Finally, defendant argues that subsection (c)(2) does not apply here on the ground that the causes of action asserted do not "arise from" the act on which plaint...