Roberts v. Owens-Corning Fiberglas Corp., Cause No. IP94-1248-C M/S.

• Decision Date: 16 September 1999
• Docket Number: Cause No. IP94-1248-C M/S.
• Parties: William Lee ROBERTS, Plaintiff, v. OWENS-CORNING FIBERGLASS CORP., et al, Defendants.
• Court: U.S. District Court — Southern District of Indiana

101 F.Supp.2d 1076

William Lee ROBERTS, Plaintiff, v. OWENS-CORNING FIBERGLASS CORP., et al, Defendants.

Cause No. IP94-1248-C M/S.

United States District Court, S.D. Indiana, Indianapolis Division.

September 16, 1999.

COPYRIGHT MATERIAL OMITTED

Linda George, Laudig George Rutherford & Sipes, Indianapolis, IN, Allard Allston, Ness Motley Loadholt Richardson & Poole, Barnwell, SC, for William Lee Roberts.

Patrick J. Phillips, Jenner & Block, Chicago, IL, Jon L. Williams, Indianapolis, IN, Bruce L. Kamplain, Norris Choplin & Schroeder, Indianapolis, IN, for Bell Asbestos Corporation Ltd.

Robin L. Babbitt, Bingham Summers Welsh & Spilman, Indianapolis, IN, for Pittsburgh Corning Corp.

ORDER

McKINNEY, District Judge.

This matter comes before the Court on a motion filed July 13, 1998, by defendant Bell Asbestos Mines Ltd. ("Bell"), seeking dismissal for lack of personal and subject matter jurisdiction. That motion was filed nearly four years after removal of the action to this Court, and a mere three weeks before the trial by jury was set to commence. Because of the impending trial date, the Court deferred ruling on the dispositive motion until after the conclusion of the trial. Beginning on August 3, 1998, a jury heard all of the evidence against defendant Bell in this product liability action and rendered its verdict on August 6, 1998, in favor of the plaintiff William Lee Roberts ("Roberts"). The jury found that Bell's asbestos had caused personal injury to Roberts and awarded him damages in the amount of $150,000.00. Judgment has not been entered on that verdict.

Also pending are Roberts' motions relating to entry of judgment on the jury verdict, and his petition for an award of compensable costs pursuant to Rule 54(d) and 28 U.S.C. § 1920, and Bell's motions for set-off against the judgment, for more specific information regarding the settlements, and to strike Roberts' claim for costs. Before addressing the issues relating to these motions, the Court must first decide whether it was proper to exercise jurisdiction over defendant Bell, and whether it had subject matter jurisdiction over an action against this defendant.

I. PERSONAL JURISDICTION

Bell claims that the Court may not exercise personal jurisdiction over it because it is a Canadian corporation that does not, and did not, do business within the State of Indiana, meaning it had insufficient contacts with the state to make the exercise of personal jurisdiction over it constitutional. In a diversity case, such as this, a district court has jurisdiction over a nonresident defendant only if a court of the state in which the district court sits would have jurisdiction. Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir.1990), cert. denied, 499 U.S. 947, 111 S.Ct. 1415, 113 L.Ed.2d 468 (1991). Indiana courts have noted that the state's "long-arm statute," expressed in Rule 4.4 of the Indiana Rules of Court, extends personal jurisdiction to the limit allowed under the due process clause of the fourteenth amendment. See Griese-Traylor Corp. v. Lemmons, 424 N.E.2d 173, 180 (Ind.Ct.App.1981). The Indiana rule provides, in relevant part:

Any person or organization that is a nonresident of this state ... submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or her or his or her agent:

(1) doing any business in this state;

* * * * * *

(3) causing personal injury or property damage in this state by an occurrence, act or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefit from goods, materials, or services used, consumed, or rendered in this state;

Ind. Tr. R. 4.4.

There is no question that Roberts suffered personal injury by an occurrence, act or omission done outside the state and that Bell derived substantial revenue from goods or materials used in this state. Moreover, the jury's verdict settles the issue of whether Roberts' injuries were caused by Bell's acts or omissions. Thus, the primary consideration in this diversity action is whether an exercise of jurisdiction would comply with due process. Id. It would if the Court determines that Bell purposefully established "minimum contacts" with the state, such that maintaining the suit does not offend "traditional notions of fair play and substantial justice." See Wilson, 916 F.2d at 1243. The minimum contacts requirement can be met in a products liability action using the "stream of commerce" theory of purposeful contact with the forum state. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Roberts invokes that theory.

Under the "stream of commerce" theory, due process is satisfied when a corporation delivers "its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." See Dehmlow v. Austin Fireworks, 963 F.2d 941, 946 (7th Cir. 1992) (quoting World-Wide Volkswagen, 444 U.S. at 297-98, 100 S.Ct. 559). Bell, on the other hand, argues that a subsequent Supreme Court decision modifying that theory is analogous to and dictates the outcome of this case. See Asahi Metal Indus. Co. v. Superior Ct., 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). In Asahi, the Court stated that the connection between the defendant and the forum state must occur by "an action of the defendant purposefully directed toward the forum state." Id. (emphasis in original). The Court further noted that the "placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State." Id.

Like the defendant in Asahi, Bell argues that it did not purposefully direct its activities toward this state. It did not register to do business in Indiana, nor does it have any agents, employees, offices, bank accounts or property in the state. Ex. B, Dufour Aff. ¶¶ 4-7. According to Bell's counsel, Richard Dufour, Bell only mines and mills raw asbestos fiber, it does not manufacture it into a product. Id. ¶ 3. Consequently, Bell cannot be found to have directed its activities toward a forum state by tailoring its product specifically for any market in the United States. Id. Dufour also states that the sale of Bell asbestos fibers occurred only in Canada, as did any deliveries, and that Bell has not negotiated, entered, or performed any contracts in Indiana. Id. ¶ 8. To the extent that any Bell asbestos appeared in Indiana, Bell argues, it was the result of the autonomous action of a third party. Relying on Asahi, Bell contends it cannot be held liable for a third party's unilateral act of transferring raw asbestos from Canada to Indiana. 480 U.S. at 109, 107 S.Ct. 1026. That portion of the Asahi decision, however, referred to the situation in World-Wide Volkswagen where a consumer purchased a vehicle in one state and drove it to another in which the injury occurred. It was the assertion that minimum contacts could be established by a consumer's unilateral act of bringing a product to the forum state that the Court rejected. Id.

The situation is entirely different when a corporation transfers its product to a manufacturer or distributor with the expectation that either of them would deliver the product into the stream of commerce for use in the forum state. More distinguishable is the case in which the manufacturer or distributor is a subsidiary or other entity related to the defendant corporation. When the sale of a product is not isolated, but arises from the efforts of a corporation to serve, directly or indirectly, the market for its product in other states, it is not unreasonable to subject the corporation to suit in one of those states. See Asahi, 480 U.S. at 110, 107 S.Ct. 1026 (quoting World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559). Moreover, the absence of physical presence in the forum state has long been held not to defeat personal jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). "So long as a commercial actor's efforts are purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there." Id. Consequently, the fact that Bell was not registered to do business in Indiana, had no agents, employees, offices, property or bank accounts in this state, will not defeat personal jurisdiction if the Court finds that Bell purposefully directed its commercial efforts toward Indiana residents, and if it would not be unreasonable to require Bell to defend its actions here. See Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995), cert. denied, 518 U.S. 1004, 116 S.Ct. 2523, 135 L.Ed.2d 1047 (1996), (citing Burger King, 471 U.S. at 472-78, 105 S.Ct. 2174).

Before reaching that analysis, however, the Court will address Roberts' arguments against dismissal. Roberts claims that Bell admitted to this Court's jurisdiction when it joined in a co-defendant's petition for removal from the Indiana state court in which the action was originally filed. Specifically, Roberts points to an allegation in that petition that this Court "would have original jurisdiction over this action pursuant to 28 U.S.C. § 1332." Section 1332 governs subject matter jurisdiction, not personal jurisdiction. Despite Roberts' assertion to the contrary, Bell's joinder in the removal petition does not mean it has already consented to this Court's personal jurisdiction over it.

A stronger case for denial of Bell's motion to dismiss is made by Roberts' argument that Bell waited too long before challenging the Court's jurisdiction, and thus waived the defense. In response, Bell points out that it included a denial of jurisdiction in its answer and as an affirmative defense, and therefore, pursuant to Rule 12(h), it...