Renner v. Lanard Toys Ltd.

Decision Date25 August 1994
Docket NumberNo. 94-3009,94-3009
Citation33 F.3d 277
PartiesProd.Liab.Rep. (CCH) P 13,999 David J. RENNER and Darcy L. Renner, his wife, Appellants, v. LANARD TOYS LIMITED.
CourtU.S. Court of Appeals — Third Circuit

Paul F. Burroughs (argued), Quinn, Buseck, Leemhuis, Toohey & Kroto, Erie, PA, for appellants.

Mary E. Wolfe (argued), Wilson, Elser, Moskowitz, Edelman & Dicker, Philadelphia, PA, for appellee.

Before: SLOVITER, Chief Judge, ROTH, Circuit Judge, and POLLAK, * District Judge.

OPINION OF THE COURT

SLOVITER, Chief Judge.

Appellants David J. Renner and his wife, Darcy L. Renner, appeal from the district court's order dismissing for lack of personal jurisdiction their products liability case against the defendant, Lanard Toys, Ltd. This case calls upon us to consider the current status of the "stream of commerce" theory of establishing specific jurisdiction over a defendant, a theory we have not addressed since our opinion in Max Daetwyler Corp. v. Meyer, 762 F.2d 290 (3d Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 383, 88 L.Ed.2d 336 (1985). Since then, the Supreme Court issued its opinion in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).

I.

On July 14, 1991, David J. Renner was severely wounded when a Lanard Toy "prop shots stuntplane" he was using allegedly exploded, lodging shards of plastic into his face and left eye. The "prop shots stuntplane" is a cylinder with a propeller on it that flies skyward when a ripcord is pulled on the plane's handheld launching pad. The toy had been purchased for Renner's nephew at the McCrory's store in Erie, Pennsylvania. It had been supplied to McCrory's by its buying agent, Trade Power Associates, Ltd., which had purchased the toy from Lanard in Hong Kong.

On February 11, 1993, the Renners filed a complaint in the Erie County Court of Common Pleas alleging causes of action based on negligence, breach of warranty, strict liability, and loss of consortium. The complaint alleges that Lanard is a Hong Kong corporation with an office in New York, and is subject to jurisdiction in Pennsylvania. Lanard removed the case to the district court on November 12, 1993 and filed a motion to dismiss for lack of personal jurisdiction three days later, on November 15, 1993.

In support of its motion to dismiss, Lanard submitted a written statement, denominated an affidavit, 1 to the district court by its Managing Director, James W. Hesterberg, asserting that Lanard manufactures toys in Hong Kong and sells them to independent distributors F.O.B. (freight-on-board) Hong Kong and does not sell or manufacture toys in Pennsylvania; that Lanard owns no real property in Pennsylvania; that it has no employees, offices, post office boxes or bank accounts in Pennsylvania; that it has no exclusive distributors, or any financial interest in or control over any of its distributors; and that it has no way of knowing or controlling where distributors market its products.

In response, the Renners presented little evidence that would connect Lanard with Pennsylvania. They submitted two affidavits detailing that Lanard toys are still sold in Pennsylvania and are carried by K-Mart and Hills Department Stores in addition to McCrory's. The Renners also submitted two documents, that apparently had been produced to them by Lanard, each titled a "Test Report." App. at 116, 123. One report dated November 13, 1990, is six pages and details the results of tests run by a Hong Kong laboratory on styles of the prop shot plane/helicopter to determine whether the samples complied with the "McCrory Stores Protocol with reference to ASTM Standard Consumer Safety Specification on Toy Safety F963-86." App. at 116, 118. The report lists McCrory Stores in York, Pennsylvania as the "Applicant." The report contains a notation showing that it was directed to the attention of a Mr. Michael Capuano, and "Debby (Lanard Toys Ltd)." App. at 116. The second, dated August 31, 1991, is a similar six page report, lists McCrory Stores as the "Applicant," and also shows it was directed to the attention of Mr. Capuano and "Miss Debbie Chan (Lanard)." App. at 122.

Plaintiffs filed their response to the motion to dismiss on December 7, 1993. Two days later, on December 9, 1993, the district court dismissed the case for lack of personal jurisdiction because it found that there was no evidence that Lanard had "purposeful[ly] avail[ed]" itself of Pennsylvania's jurisdiction. District court op. at 1. Plaintiffs' motion for reconsideration was filed December 13 and denied by the Court on December 15. The plaintiffs filed a timely notice of appeal.

II.

In determining whether a federal court can maintain jurisdiction over a nonresident defendant, we must first determine whether the exercise of jurisdiction is authorized under the state (or appropriate federal) long-arm statute and then whether it meets the requirements of the Due Process Clause of the United States Constitution. Pennsylvania's long-arm statute authorizes jurisdiction to the fullest extent permissible under the Constitution:

the jurisdiction of the tribunals of this Commonwealth shall extend to all persons ... to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.

42 Pa.Cons.Stat.Ann. Sec. 5322(b) (1981). Therefore, this court's inquiry is solely whether the exercise of personal jurisdiction over the defendant would be constitutional. See Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1221 (3d Cir.1992) ("The Pennsylvania statute permits the courts of that state to exercise personal jurisdiction over nonresident defendants to the constitutional limits of the due process clause of the fourteenth amendment. Therefore, the district court's exercise of personal jurisdiction over these defendants was proper as long as it did not violate due process." (citations omitted)); Provident Nat'l Bank v. California Fed. Savings & Loan Ass'n, 819 F.2d 434, 435-36 (3d Cir.1987) (same); see also Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 481 (3d Cir.1993) (same); Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 144-45 (3d Cir.) (same with respect to New Jersey law), cert. denied, --- U.S. ----, 113 S.Ct. 61, 121 L.Ed.2d 29 (1992).

The Renners contend that although Lanard is not physically present in Pennsylvania, it is constitutional to exercise jurisdiction over it because Lanard placed its products into a stream of commerce that led them into that state. The Renners advocate an expansive version of the "stream of commerce" theory, arguing that jurisdiction may be sustained whenever a manufacturer places a product in the stream of commerce with an awareness that the product will be sold to customers in the forum state. The Renners also assert that even if a narrower version of the theory is applied, they have submitted enough evidence to prove that the maintenance of personal jurisdiction over Lanard is permissible.

In World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 295, 100 S.Ct. 559, 564, 566, 62 L.Ed.2d 490 (1980), the Supreme Court rejected the contention that the mere foreseeability that a product one sells may end up in the forum state renders the seller amenable to suit there. In that case, plaintiffs, who were injured in an automobile accident in Oklahoma, sought to obtain jurisdiction in that state over the New York automobile dealer from whom one of the plaintiffs purchased the car and the dealer's New York wholesaler. The Court held that the plaintiff's unilateral act in bringing the automobile into Oklahoma was not in itself enough to establish the requisite minimum contacts over the defendants. Id. at 298, 100 S.Ct. at 567. In his dissent, Justice Brennan alluded to the "stream of commerce" theory, noting that "[t]he sale of an automobile does purposefully inject the vehicle into the stream of interstate commerce so that it can travel to distant States," id. at 306, 100 S.Ct. at 584, but that discussion appears to have been influenced by the unique nature of the automobile within commerce.

This court first discussed the "stream of commerce" theory in DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 285 (3d Cir.), cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620 (1981), in which we described it with approval as a "theory developed as a means of sustaining jurisdiction in products liability cases in which the product has traveled through an extensive chain of distribution before reaching the ultimate consumer." We explained that under this theory, "a manufacturer may be held amenable to process in a forum in which its products are sold, even if the products were sold indirectly through importers or distributors with independent sales and marketing schemes." Id.

DeJames, a New Jersey longshoreman, was injured on an automobile carrier boat while it was docked in New Jersey. He brought suit in New Jersey against, inter alia, Hitachi, a Japanese corporation, alleging that it had negligently converted that boat from a bulk carrier to an automobile carrier. The conversion had been performed in Japan; Hitachi's only contact with New Jersey was that the ship was docked there when plaintiff was injured.

We relied on the Supreme Court's decision in World-Wide Volkswagen in holding that Hitachi's customer's unilateral action in bringing the boat to New Jersey was insufficient to establish minimum contacts. Id. at 286. Nonetheless, we suggested in dictum that subjecting manufacturers who place their products in the "stream-of-commerce," even indirectly through importers or distributors with independent sales and marketing schemes, may be consistent with due process. Id. at 285. 2 We did not comment, however, on whether mere knowledge that a product would end up in a given state was itself enough...

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