Ruckstuhl v. Owens Corning Fiberglas Corp.

• Decision Date: 13 April 1999
• Docket Number: No. 98-CC-1126.,98-CC-1126.
• Citation: 731 So.2d 881
• Parties: Evelyn Decuir RUCKSTUHL and Richard E. Ruckstuhl v. OWENS CORNING FIBERGLAS CORPORATION, et al.
• Court: Louisiana Supreme Court

731 So.2d 881

Evelyn Decuir RUCKSTUHL and Richard E. Ruckstuhl v. OWENS CORNING FIBERGLAS CORPORATION, et al.

No. 98-CC-1126.

Supreme Court of Louisiana.

April 13, 1999.

George R. Covert, Sean D. Fagan, Baton Rouge, for Applicant.

John J. Hainkel, Frilot, Partridge, Kohnke & Clements, New Orleans; John D. Cosmich; Edwin A. Ellinghausen, III, Porteous, Hainkel, Johnson & Sarpy; Michael D. Harold, Julie DeFulco Robles, Hailey McNamara, Hall, Larmann & Papale, Metairie; J. Michael Johnson, Galloway, Johnson, Tomplins & Burr, New Orleans; Susan B. Kohn, Simon, Peragine, Smith & Redfearn, New Orleans; Steven W. Copley, Gordon, Arata, McCullam & Dulantis, New Orleans; Charles V. Giordano, Album, Stovall, Radecker & Giordano, Metairie; David L. Guerry, Michael A. Patterson, Baton Rouge, Andrew J. McDlaney, Jr., Daniel P. Olohan, Nutter, McLennen & Fish; Arthur W. Stout, III, Deutsch, Kerrigan & Stiles; George R. Covert, Sean D. Fagan, Baton Rouge, for Resondent.

VICTORY, J.¹

We granted this writ to determine whether this state may exercise personal jurisdiction over a nonresident corporate defendant who manufactured and supplied, in vast quantities, a major component part of a product which entered Louisiana through the marketing and distribution practices of the end product manufacturer and purportedly injured a Louisiana resident.

FACTS AND PROCEDURAL HISTORY

In March of 1996, Evelyn Ruckstuhl, a resident of East Baton Rouge Parish, was diagnosed with malignant mesothelioma, a form of lung cancer, as a result of exposure to asbestos. Mr. and Mrs. Ruckstuhl filed a petition for damages against ten defendants², including Hollingsworth and Vose Company ("H & V"), Vose Specialties Co., Inc. ("Specialties"), and Lorillard Tobacco Company ("Lorillard"), in the parish of East Baton Rouge on January 13, 1997. Plaintiffs allege that between 1952 and 1959, Mrs. Ruckstuhl inhaled asbestos fibers and dust from her husband's work clothes during his employment at the Exxon refinery and that she smoked Kent cigarettes with a "Micronite" filter containing crocidolite asbestos. They assert that during that period, H & V and/or its wholly owned subsidiary, Specialties, manufactured, sold, and/or distributed the asbestos-containing filter material to Lorillard, which was then used by Lorillard to create the Micronite filter, a component part incorporated into Kent cigarettes that were distributed throughout the nation. Plaintiffs argue that H & V clearly "delivered its product into the stream of commerce with the expectation that its filters would be purchased along with the Kent cigarettes in Louisiana" since approximately 13 billion Kent cigarettes were sold during this period containing the Micronite filters with the asbestos manufactured by H & V. Plaintiffs further point out that the Kent Micronite filter was extensively advertised nationally, both in print and on television.

On March 20, 1997, H & V timely filed a Declinatory Exception of Lack of Personal Jurisdiction supported by an affidavit executed by Paul Walker, Director of Regulatory Affairs at H & V. According to the affidavit, Specialties was a wholly-owned subsidiary of H & V which entered into a contract with Lorillard in February 1952, whereby Specialties would manufacture bulk filter material for Lorillard to use in the Kent Micronite filter. Specialties manufactured the filter material in Massachusetts from early 1952, the date of its incorporation, until May 1956, before being merged into H & V in 1957. The bulk filter media was shipped directly from Specialties' plants in Massachusetts to Lorillard's manufacturing plants in New Jersey and Kentucky, where it was incorporated into the Micronite filter. The affidavit further states that Specialties never sold, delivered, advertised, or marketed its filter material in Louisiana, did not design the filter media for any Louisiana market, did not have any Louisiana customers for such product, and did not maintain an office or obtain a license to do business in Louisiana. Moreover, the affidavit states that H & V has never had an office or other place of business in Louisiana, does not have any employees in Louisiana, is not registered to do business in Louisiana, does not maintain any bank accounts in Louisiana, and does not maintain toll-free numbers for the use of Louisiana residents.

Following oral arguments, the trial court denied H & V's exception. H & V timely filed its application for supervisory writs with the court of appeal and on February 20, 1998, the First Circuit reversed the district court's ruling and granted H & V's declinatory exception. In so holding, the First Circuit adopted the "stream of commerce plus" theory as articulated by Justice O'Connor in Part II-A of her opinion in Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), and held that H & V's placement of the filter media into the stream of commerce was insufficient to establish sufficient minimum contacts with Louisiana. Ruckstuhl v. Owens Corning Fiberglas Corp., 97-1132 (La.App. 1st Cir.2/20/98), 709 So.2d 238, 242. We granted plaintiffs writ to consider whether this ruling was correct. Ruckstuhl v. Owens Corning Fiberglas Corp., 98-C-1126 (La.6/19/98), 720 So.2d 1208.

DISCUSSION

Historically, the jurisdiction of the state courts to render judgments in personam was limited to a defendant's physical presence within the court's territorial jurisdiction. Pennoyer v. Neff, 95 U.S. 714, 733, 24 L.Ed. 565 (1877). However, recognizing the realities of modern commercial life, the United States Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), rejected the legal fiction of "presence" and instead focused its attention on the due process aspect of personal jurisdiction. The Court held that subjecting a nonresident defendant to a judgment in personam requires that he must "have certain minimum contacts with [the state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316, 66 S.Ct. 154 (citing Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Further, "[w]hether due process is satisfied must depend ... upon the quality and nature of the activity in relation to the fair and orderly administration of the laws." Id. at 319, 66 S.Ct. 154.

The Louisiana legislature enacted Louisiana's first Long-arm Statute in 1964 in order "to permit the courts of this state to tap the full potential of jurisdiction in personam over nonresidents permitted by International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057 (1945); and McGee v. International Life Insurance Company, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957)." La. R.S. 13:3201, Comment (a).

The original statute, La. R.S. 13:3201, listed specific activities by a defendant which would subject it to the personal jurisdiction of this state.³ In reaction to the decision of the United States Supreme Court in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), in 1984, Subsection (h) was added⁴ to provide for jurisdiction over a cause of action arising from a nonresident's:

Manufacturing of a product or component thereof which caused damage or injury in this state, if at the time of placing the product into the stream of commerce, the manufacturer could have foreseen, realized, expected, or anticipated that the product may eventually be found in this state by reason of its nature and the manufacturer's marketing practices.

However, realizing that the Long-arm Statute still did not really extend to the limits allowed by due process, in 1987, the legislature amended La. R.S. 13:3201 by Acts 1987, No. 418 to add Subsection B which provides:

In addition to the provisions of [13:3201(A)], a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and the Constitution of the United States.

Thus, although the legislature adopted the stream of commerce language from World-Wide Volkswagen in enacting La. R.S. 13:3201A(8), our relevant inquiry is properly directed at the broader jurisdictional provision, La. R.S. 13:3201B, which was intended to allow Louisiana courts to exercise personal jurisdiction over non-resident defendants to the fullest extent allowed by the United States Constitution, even if non-resident's conduct is not specifically listed in the provisions of La.R.S. 13:3201A..

Accordingly, "[t]he limits of the Louisiana Long-arm Statute and the limits of constitutional due process are now coextensive." Petroleum Helicopters, Inc. v. Avco Corp., 513 So.2d 1188, 1192 (La.1987). "Now, under the express wording of the present Long-arm Statute, the sole inquiry into jurisdiction over a nonresident is a one-step analysis of the constitutional due process requirements." Id.

The Due Process Test

The due process test first enunciated in International Shoe requires that in order to subject a nonresident defendant to a personal judgment, the defendant must have certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe, supra, 326 U.S. at 320, 66 S.Ct. at 160. The test has been interpreted by the United States Supreme Court in a series of cases since International Shoe. See Superior Supply Co. v. Associated Pipe & Supply Co., 515 So.2d 790, 792-796 (La.1987)

for a summary of each of these cases.

The test has evolved into a two-part test, the first part being the "minimum contacts" prong, which is satisfied by a single act or actions by which the defendant "purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits...