Volkswagenwerk, A. G. v. Klippan, GmbH

• Decision Date: 09 May 1980
• Docket Number: Nos. 4336,4368,s. 4336
• Citation: 611 P.2d 498
• Parties: VOLKSWAGENWERK, A. G. and Volkswagen of America, Appellants/Cross-Appellees, v. KLIPPAN, GmbH, Appellee/Cross-Appellant.
• Court: Alaska Supreme Court

Page 498

611 P.2d 498

VOLKSWAGENWERK, A. G. and Volkswagen of America Appellants/Cross-Appellees, v. KLIPPAN, GmbH, Appellee/Cross-Appellant.

Nos. 4336, 4368.

Supreme Court of Alaska.

May 9, 1980.

David H. Thorsness, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, for appellants.

Joseph L. Young, Atkinson, Conway, Young, Bell & Gagnon, Theodore R. Dunn, Dunn, Baily & Mason, Anchorage, for appellee.

Before RABINOWITZ, C. J., CONNOR, BOOCHEVER, and BURKE, JJ., and DIMOND, Senior Justice.

OPINION

RABINOWITZ, Chief Justice.

On December 24, 1972, Dr. Charles R. Munns suffered injuries in an automobile accident while driving his 1967 model Volkswagen Beetle. Dr. Munns subsequently brought suit to recover for his injuries against the offending driver, the manufacturer of the Munns vehicle, Volkswagenwerk, A. G. (VWAG) and its importer, Volkswagen of America, Inc. (VWoA).

The only claim submitted to the jury against the defendants was that the original equipment seat belt in the vehicle was defective and that the defect was a proximate cause of Dr. Munns's injuries. The manufacturer and supplier of the seat belt, Klippan, GmbH (Klippan), was eventually asked by VWAG to participate in the defense of the case following pretrial conference, but Klippan refused. Klippan also rejected a tender of the defense of the Munns case by VWAG and VWoA. One of Klippan's safety engineers did assist VWAG and VWoA in the preparation of the Munns case and served as an expert witness, although Klippan maintains he did not do so as a representative of Klippan.

The jury awarded a verdict against all three defendants in the Munns case, and judgment in the amount of approximately $9,300,000 was entered. While the case was on appeal to this court a settlement in the amount of $5,015,000 was negotiated between the defendants and Dr. Munns.

After entry of the judgment in the Munns case, the instant action was brought in Alaska by VWAG and VWoA against Klippan and its parent corporation, Allied Chemical Corporation, seeking payment of all or part of the judgment on contractual grounds and under statutory and equitable principles ¹ of indemnity and contribution. Klippan then filed a declaratory judgment action against VWAG in Germany in which it sought a determination of what obligations, if any, it owed to VWAG under German law as a result of the Munns accident. Among the affirmative defenses which Klippan asserted in the Alaska action were that the superior court lacked personal jurisdiction over Klippan, and that a forum selection clause contained in the contract by which Klippan supplied seat belt restraint systems to VWAG limited litigation exclusively to a German forum. The superior court determined that jurisdiction over Klippan existed, but dismissed the contribution and indemnity actions on the basis of the forum selection clause, holding the clause bound both VWAG and VWoA. VWAG and VWoA now bring this appeal from the superior court's decision with respect to the forum selection clause. On cross-appeal, Klippan challenges the superior court's jurisdictional determination.

I. Superior Court's Jurisdiction as to Klippan

We affirm the superior court's ruling regarding its jurisdiction as to Klippan. Personal jurisdiction over a foreign or out-of-state defendant whose products cause injury to persons or property within this state is conferred by AS 09.05.015, Alaska's "long-arm" statute. We have construed this statute to extend Alaska's jurisdiction to the maximum reach consistent with the guarantees of due process under the Fourteenth Amendment, Jonz v. Garrett/Airsearch Corp., 490 P.2d 1197 (Alaska 1971). Thus the sole question which must be addressed in regard to this specification of error is whether the application of Alaska's "long-arm" statute to Klippan in the circumstances of this case is in violation of due process.

In order to meet due process standards personal jurisdiction over a non-resident defendant requires certain minimum contacts with the state "(so) that maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). When a manufacturer voluntarily places its product in the general stream of commerce without restriction, the "minimum contact" requirement is satisfied in all forums where it is foreseeable to the manufacturer that the product may be marketed. Commodities World Int'l. Corp. v. Royal Mile, Inc., 440 F.Supp. 1373, 1378-79 (D.C.Puerto Rico 1977); Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961). The "stream of commerce" doctrine has been adopted by the majority of American jurisdictions having long-arm statutes. ² In Modern Trailer Sales, Inc. v. Traweek, 561 P.2d 1192, 1196 (Alaska 1977), quoting Jones Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136, 1140 (9th Cir. 1971) we indicated our approval of the stream of commerce rule.

In our view Klippan has sufficient minimum contacts with the State of Alaska, by deliberately placing their seat belt restraint system in the general stream of commerce, to meet due process standards for personal jurisdiction. Klippan has sold millions of seat belt assemblies for incorporation into automobiles it knew were destined for purchase by consumers throughout the United States. Alaska law required installation of lap belts in all automobiles sold in this state during 1967, the model year of the Munns car. ³ Klippan represented by a label sewn on the belt involved in the Munns accident that its restraint systems were "approved for sale in all states," and took steps to insure that the belts complied with standards established by the American Society of Automotive Engineers. Klippan thus knew or had reason to believe that its seat belts could be distributed and sold for use in Alaska, and did not limit the sale or marketing of the restraint system in the United States. See Keckler v. Brookwood Country Club, 248 F.Supp. 645, 649 (N.D.Ill.1965); Commodities World Int'l. v. Royal Mile, Inc., 440 F.Supp. 1373, 1379 (D.C.Puerto Rico 1977); Mann v. Frank Hrubetz & Co., Inc. 361 So.2d 1021, 1025 (Ala.1978).

Klippan argues that the stream of commerce doctrine should not apply to the manufacturer of a component part of a product which is widely distributed by another entity. The modern trend of case law indicates otherwise where, as here, the component manufacturer deliberately designs its product in anticipation of it being widely marketed in American jurisdictions, and sells the component directly to several major auto producers with the knowledge that the component will be incorporated into their products and sold throughout America. ⁴ The fact that Klippan did not directly engage in business dealings in Alaska does not relieve it from answering for injuries which may result from use of its product in this state. It was entirely foreseeable to Klippan, from its own conduct, that a number of its restraint systems would be purchased by consumers in Alaska through normal sales and distribution patterns in the United States. ⁵ In this regard we have previously pointed out that the chain of distribution is not a significant factor in determining jurisdiction:

We hold, as did . . . (Gray ) . . . that the fact that some of the purchases were made from independent middlemen or that someone other than the manufacturer caused the product to be shipped into the state are not controlling factors.

Stephenson v. Duriron Co., 401 P.2d 423, 429 (Alaska 1965), cert. denied, 382 U.S. 956, 86 S.Ct. 431, 15 L.Ed.2d 360 (1965). ⁶

We likewise reject Klippan's argument that the stream of commerce theory should not apply where the party attempting to assert jurisdiction is a non-resident corporation bringing an indemnity or contribution action separate from the original products liability lawsuit. Where a party is answerable in damages for injury occurring in this state, it is no more burdensome for that party to defend a separate indemnity action than to appear in the original suit. ⁷ The fact that the party seeking indemnity or contribution is a foreign corporation rather than the original injured plaintiff is not a justification for immunizing an ultimately responsible party from liability under the laws of the state where the injury occurred, see, e. g., Washington v. U. S. Suzuki Motor Corp., 257 Pa.Super. 482, 390 A.2d 1339, 1341 (1978); Rovin Sales Co. v. Socialist Republic of Romania, 403 F.Supp. 1298, 1302 (N.D.Ill.1975); Jet America, Inc. v. Gates Learjet Corp., 145 Ga.App. 258, 243 S.E.2d 584, 587 (1978).

Finally, we reject Klippan's contention that to subject it to jurisdiction in Alaska would be so unreasonable as to violate due process. See Stephenson v. Duriron Co., 401 P.2d 423, 429 (Alaska 1965). Inconvenience to at least some parties will probably be associated with litigation in either this jurisdiction or the German forum which Klippan prefers. It appears that legal doctrine, documents, exhibits, witnesses, and counsel from both Germany and Alaska may be involved in the action. Of the named parties, two are German and two are American corporations. The original injury and underlying litigation occurred in this state. Under these circumstances, Alaska's jurisdictional power must be upheld despite claims of inconvenience and unreasonableness by Klippan.

II. Forum Selection Clause and VWAG

We also affirm the superior court's enforcement of the forum selection clause against VWAG. The clause in question was drafted by VWAG, and incorporated as a part of the purchase order which served as the contractual agreement between Klippan and VWAG for the sale of Klippan's seatbelt assemblies to VWAG. The clause in translation reads:

Venue for all disputes that may result from our orders is the court of competent jurisdiction for Wolfsburg.

The validity and interpretation of a forum selection...