Civil Procedure - Jurisdiction Over Foreign Manufacturer in Products Case

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Van Heeswik v. Jabiru Aircraft PTY, Ltd, 633 Ariz. Adv. Rep. 43 (App. Div. II, April 24, 2012) (J. Vasquez)

FOREIGN MANUFACTURER WITH DISTRIBUTORS IN THE U.S. THAT REQUIRES DISTRIBUTORS TARGET ARIZONA CONSUMERS IS SUBJECT TO PERSONAL JURISDICTION IN ARIZONA

Plaintiffs' decedent died when the propeller fell off the airplane he was piloting and it crashed in Marana. He had built the plane from a kit. The kit was sold by defendant through its Tennessee distributor. Plaintiffs' sued defendant for strict products liability, negligence and breach of warranty. Defendant obtained summary judgment from the trial court based upon the fact it was an Australian corporation with no employees in the U.S., did not manufacture the product in the U.S. and its only contact with the U.S. was the maintenance of some distributorships to sell the kits in the U.S. The trial court ruled the plaintiff lacked personal jurisdiction. The Arizona Court of Appeals reversed and remanded.

First the court of appeals recognized the question of personal jurisdiction boils down to one essential question: “Considering all of the contacts between the defendant and the forum state, did the defendant engage in purposeful conduct for which it could reasonably expect to be haled into that state's court with respect to that conduct?” Applying this question to the facts before the court, it found that where the defendant established distributorships in the U.S., directed its product into the U.S. exclusively through those distributorships, required by contract that those distributors make their best efforts to market the products in the U.S. and specifically in Arizona , agreed that it too would use its best efforts to promote sales and received financial benefit from these sales, minimum contacts existed for it to foresee it might be haled into an Arizona court for allegedly producing a defective product.

Next the court recognized that forseeability that it may be haled into court alone does not create personal jurisdiction. The court noted that in addition it must be shown the “an action of the defendant was purposefully directed toward the forum.” This requirement was met here by virtue of defendant requiring its distributors make their “best efforts” to market the product in the U.S. and specifically in the state of Arizona. Further the evidence showed the defendant derived substantial income from the Arizona sales.

Finally, the court found that it must determine if it would be reasonable to
exercise personal jurisdiction over the defendant, i.e., would it be an
unreasonable burden upon the defendant to have to defend its product in an
Arizona court. Here the defendant had stipulated that jurisdiction would
be appropriate in Tennessee where the distributor that actually sold the
product was located and in fact argued that Tennessee was the most
appropriate forum for this case. Having shown no reason why defending in
Arizona would be any more burdensome than defending in Tennessee, the court
concluded it was reasonable to assert personal jurisdiction in Arizona.

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