ROCKWELL INTERN. CORP. v. COSTRUZIONI AERONAUTICHE Civ. A. No. 81-3984.
553 F.Supp. 328 (1982)
ROCKWELL INTERNATIONAL CORP. v. COSTRUZIONI AERONAUTICHE GIOVANNI AGUSTA, S.p.A. and S.N.F.A.
United States District Court, E.D. Pennsylvania.
December 22, 1982.
David L. Steck, Rawle & Henderson, Philadelphia, Pa., Joseph K. Powers, Bigham, Englar, Jones & Houston, New York City, for plaintiff.
James J. Donohue, and Mark L. Parisi, White & Williams, Philadelphia, Pa., Elliott M. Kroll, Kroll, Killarney, Pomerantz & Cameron, New York City, for defendant S.N.F.A.
Richard L. Goerwitz, Jr., Swartz, Campbell & Detweiler, Philadelphia, Pa., for Rudolph V. Pino, Speiser & Krause, P.C., New York City, for defendant Agusta.
GILES, District Judge.
This products liability suit arises from a helicopter crash over the Ohio River on January 16, 1981. The owner of the helicopter, Rockwell International Corporation ("Rockwell"), sues both the manufacturer, Costrozioni Aeronautiche Giovanni Agusta, S.p.A. ("Agusta") and the maker of an allegedly defective component part, SNFA. Both defendants are foreign corporations. Agusta has voluntarily submitted to the jurisdiction of this court, but SNFA moves to dismiss for lack of personal jurisdiction. For the reasons outlined below, SNFA's motion to dismiss shall be denied.
SNFA, a French corporation with no apparent place of business in the United States, designs and manufactures ball bearing assemblies. These assemblies, along with accessories and replacement parts are sold by SNFA to its Italian subsidiary, Somecat, S.p.A. Somecat is SNFA's exclusive distributor in Italy, who, in turn, sells the ball bearings and replacement parts to Agusta which is also an Italian corporation.
Rockwell, a Delaware corporation with its principal place of business in Pennsylvania,
The ball bearings manufactured by SNFA are custom designed for the Agusta A-109 helicopter. They cannot be used in any other helicopter model. Agusta buys all bearings for the A-109 from SNFA. During the design and testing of the ball bearings, SNFA worked closely with Agusta engineers and was aware that the A-109 helicopter was targeted for the executive corporate transport market in the United States and Europe. SNFA has advertised its bearings in the World Aviation Directory, a publication widely circulated throughout Europe, Canada and the United States. In addition, it has an exclusive agreement with Air Supply Company, a division of Garrett Corporation, located in California. This agreement allows Air Supply to promote and sell SNFA's precision bearings throughout the continental United States. SNFA has also sold turbine engine bearings directly to General Electric Corporation and Garrett Corporation. The engines into which these bearings are incorporated are marketed throughout the United States.
In deciding SNFA's motion to dismiss for want of personal jurisdiction, I must accept as true all of plaintiff's wellplead allegations of fact, viewing all reasonable inferences in the light most favorable to the non-moving party. See Hollinger v. Wanger Min. Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). See also Empire Abrasive Equipment Corp. v. H.H. Watson, 567 F.2d 554, 557 (3d Cir.1977); Van Naarden v. Grassi, 488 F.Supp. 720, 722 (E.D.Pa.1980). Once a defendant properly challenges the court's personal jurisdiction, the plaintiff has the ultimate burden of proving that the non-resident defendant's activities with the forum state permit the exercise of jurisdiction. See Strick Corp. v. A.J.F. Warehouse Distributors, Inc., 532 F.Supp. 951, 953 (E.D.Pa.1982); Boysen v. Treadway Inn of Lake Harmony, Inc., 53 F.R.D. 96, 98 (E.D. Pa.1971), aff'd per curiam, 463 F.2d 247 (3d Cir.1972).
Rule 4(e) of the Federal Rules of Civil Procedure permits a federal district court to exercise personal jurisdiction over a nonresident to the extent allowed by the law of the state where the court sits. Western Union Telegraph Co. v. T.S.I. Ltd., 545 F.Supp. 329, 332 (D.N.J.1982). Pennsylvania's long arm statute, Pa.Cons.Stat.Ann. tit. 42 § 5322 (Purdon 1981) permits the exercise of personal jurisdiction "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact" with Pennsylvania allowed under the Constitution. Pa. Cons.Stat. tit. 42 § 5322(b). Where the state long-arm statute is written so broadly, the Third Circuit has failed to first examine the precise statutory language, instead focusing directly upon the constitutional due process requirements. Carty v. Beech Aircraft Corp., 679 F.2d 1051, 1058 (3d Cir. 1982); DeJames v. Magnificance Carriers Inc., 654 F.2d 280, 284 (3d Cir.), cert. denied,
Plaintiff's cause of action arises out of a specific forum-related act. The thrust of the inquiry is upon whether there are sufficient contacts with the forum state arising from that "transaction" so as to justify the assertion of personal jurisdiction over the defendant. See Reliance Steel Products Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 588 (3d Cir.1982). In order to conclude that the exercise of jurisdiction is permissible, three criteria must be satisfied. See Lacovara v. Merrill, Lynch, Pierce, Fenner and Smith, Inc., et al., 551 F.Supp. 601 at 603 (E.D.Pa.1982). First, the cause of action must arise from defendant's activity within the state. I find that this element is satisfied. Rockwell's cause of action is traced from the sale of the ball bearings by SNFA, through its chain of distribution, to the apparent malfunction that allegedly caused the helicopter to crash. The sale,
The second requirement is that the non-resident defendant purposely availed itself of the privilege of acting within the forum, thus invoking the benefits and protections of the forum's laws. See Hanson v. Denkla, 357 U.S. 235, 246, 78 S.Ct. 1228, 1235, 2 L.Ed.2d 1283 (1958). Specifically, a corporation must engage in activities within the forum such that it is reasonably foreseeable
Defendant argues that it has not purposefully availed itself of the privileges of conducting business within Pennsylvania. It maintains that it has confined its sales to the European market and that it is solely Agusta, which has purposefully availed itself of the United States and Pennsylvania market. This contention misses the mark. While SNFA's involvement in the sale and distribution of the ball bearing may be once or twice removed from Agusta's final sale to Rockwell, SNFA's purposeful availment, critical in the minimum contacts analysis, actually took place at an earlier point. That occurred when SNFA decided to enter and exploit the international "executive corporate transport market," and toward that end, began to work closely with Agusta's engineers to develop the ball bearings for the A-109 with the knowledge that the
In World-Wide Volkswagen, the Supreme Court drew a distinction between a local or regionalized dealer and a manufacturer or major distributor. Except for a rare sale, the local dealer generally confines the market he serves to a limited area. However, the marketing territory and the sale of a product by a manufacturer or distributor is not intended to be so confined. The sale of its product to a distant state is not simply an isolated occurrence, but instead, arises from the corporation's affirmative efforts to serve, directly or indirectly, the largest possible market for its product. See World-Wide Volkswagen, 444 U.S. at 297-98, 100 S.Ct. at 567, citing Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961). See also Tedford v. Grumman American Aviation Corp., 488 F.Supp. 144, 146 (N.D.Miss.1980) (overhauler of aircraft engines who remanufactured engine, delivered it into stream of commerce, with expectation that it would be purchased and used by someone engaging in agricultural pursuits).
The distinction between a dealer or distributor seeking to serve a limited market, and a manufacturer seeking to serve a larger market, was recognized by the Superior Court of Pennsylvania in Goff v. Armbrecht Motor Truck Sales, Inc., 284 Pa.Super. 544, 426 A.2d 628 (1980). In quoting from Developments — Jurisdiction, 73 Harv.L.Rev. 909, 929 (1960), the court noted:
284 Pa.Super. at 554-55, 426 A.2d at 633.
In DeJames v. Magnificance Carriers, Inc., 654 F.2d 280 (3d Cir.) cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620 (1981), the plaintiff, a New Jersey longshoreman, sued for personal injuries which he sustained while working on defendant's vessel while it was moored to a pier in the forum state. Defendant, Hitachi, a Japanese corporation, had converted the ship in Japan so that it would be capable of transporting automobiles. DeJames argued that the conversion work done by Hitachi had, in effect, made Hitachi the "manufacturer of the vessel," and therefore, amenable to jurisdiction under the stream of commerce doctrine. Focusing upon the indirect marketing scheme and the consequent economic benefits derived from residents of the forum, the Third Circuit explained:
654 F.2d at 285.
It is more appropriate to characterize SNFA as a manufacturer, competing in an
In Oswalt v. Scripto, Inc., 616 F.2d 191 (5th Cir.1980), the stream of commerce doctrine was applied to impose jurisdiction over a non-resident defendant like SNFA. A Japanese cigarette lighter manufacturer, Tokai-Seiki, and its exclusive American distributor, Scripto, were sued for injuries sustained when a Texas consumer was seriously burned by the lighter's alleged malfunctioning. The Japanese manufacturer, which produced, sold and delivered millions of the lighters to Scripto in Japan, was held reasonably to know or expect that the sales through its exclusive distributorship system would be nation-wide. The Fifth Circuit found these facts sufficient to impose in personam jurisdiction. The court held that the lighter manufacturer should have known that its products would reach Texas, and any or all other states, in the normal course of the distribution chain. Nothing in the facts of Oswalt indicated to the court that Tokai-Seiki has attempted in any way to limit the states in which its lighters could be sold. Given the distribution arrangement, the manufacturer's conduct and connection with the forum were such that it could reasonably have anticipated being haled into court there. Id. 616 F.2d at 198-200. See also Noel v. S.S. Kresge Co., 669 F.2d 1150, 1155 (6th Cir.1982); Cooper Industries, Inc. v. J & J Fabrics, Inc., 212 U.S.P.Q. 433, 434 (1980). The case at bar is analogous. Given the distribution system, SNFA had ample reason to know and expect that its bearing, as a unique part of a larger product, would be marketed in any or all states, including the Commonwealth of Pennsylvania. Like the manufacturer in Oswalt, SNFA did not in any way attempt to restrict its market or limit the states in which its bearings could be sold.
SNFA argues that although it may have been foreseeable that its bearings would find their way into any given state, under World-Wide Volkswagen, foreseeability alone is insufficient to establish minimum contacts. 444 U.S. at 295, 100 S.Ct. at 566. While it is true that this kind of foreseeability is not determinative, it is noted that SNFA chose to participate in a nation-wide marketing chain. This makes the sale of products incorporating its bearings, not merely foreseeable, but affirmatively welcomed.
The final prong of the analysis focuses upon whether the exercise of jurisdiction was reasonable and fundamentally fair. SNFA designed and manufactured a component that was incorporated into a product which was intended to be, and was, in fact, sold in both Europe and the United States. Where that component allegedly fails and causes injury in the very market in which the product was expected to be sold, it is not unreasonable or unfair to require the defendant to be subject to suit in that forum.
Moreover, a manufacturer or major distributor should not be allowed to profit from the sale of its product in a state, while simultaneously insulating itself from liability by establishing an indirect and multi-faceted chain of distribution. See Poyner v. Erma Werke GMBH, 618 F.2d 1186, 1190 (6th Cir.) cert. denied sub nom. Insurance Co. of North America v. Poyner, 449 U.S. 841, 101 S.Ct. 121, 66 L.Ed.2d 49 (1980). Simply because a business operation is structured in such a way as to avoid direct activity in the Commonwealth of Pennsylvania would not prevent the state courts from imposing personal jurisdiction upon the non-resident defendant. Crucible, Inc. v. Stora Kopparbergs Bergslags AB, 403 F.Supp. 9, 12 (W.D.Pa.1975).
As the Third Circuit aptly stated in DeJames:
654 F.2d at 285. See also Poyner, 618 F.2d 1186, 1189, quoting Volvo of America Corp. v. Wells, 551 S.W.2d 826, 828 (Ky.App.1977); Novinger v. E.I. duPont deNemours & Co., Inc., 89 F.R.D. 588, 594 (M.D.Pa.1981).
Accordingly, I find that this court may properly exercise in personam jurisdiction over defendant SNFA, and defendant's motion to dismiss is denied.
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