Opinion ID: 2345867
Heading Depth: 1
Heading Rank: 4

Heading: Purposeful Availment Analysis

Text: Notwithstanding the distinctions between general and specific personal jurisdiction, `[i]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.' Camelback I, 307 Md. at 277, 513 A.2d at 877 (quoting Hanson, 357 U.S. at 253, 78 S.Ct. at 1240, 2 L.Ed.2d at 1298). Thus, the absence of any purposeful availment by the defendant stands as an obstacle to whether the defendant's contacts with the forum state amount to the sufficient minimum contacts necessary to confer jurisdiction in either a specific or general jurisdiction context. The United States Supreme Court explained the rationale behind the purposeful availment requirement in Burger King Corp., 471 U.S. at 475-76, 105 S.Ct. at 2183-84, 85 L.Ed.2d at 542-43: T[he] purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third person. Jurisdiction is proper, however, where the contacts proximately result from actions by the defendant himself that create a substantial connection with the forum State. Thus where the defendant deliberately has engaged in significant activities within a State, or has created continuing obligations between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by the benefits and protections of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well. (Citations and footnotes omitted). In World-Wide Volkswagen Corp., the Supreme Court also held that Oklahoma did not have personal jurisdiction over a New York auto dealer after the plaintiffs, Oklahoma residents, purchased a vehicle in New York and were injured in an auto accident in their home state. 444 U.S. at 298-99, 100 S.Ct. at 567-68, 62 L.Ed.2d at 502. The plaintiffs argued that, based on the mobility of cars, and because the defendant auto dealer could have clearly foreseen that a car sold in New York could be driven in Oklahoma, there was purposeful availment. World-Wide Volkswagen Corp., 444 U.S. at 295, 100 S.Ct. at 566, 62 L.Ed.2d at 500. The Supreme Court disagreed, however, noting that: foreseeability alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause.... This is not to say, of course, that foreseeability is wholly irrelevant. But the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.... When a corporation purposefully avails itself of the privilege of conducting activities within the forum State, it has clear notice that it is subject to suit there.... The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its goods into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. World-Wide Volkswagen Corp., 444 U.S. at 295, 297-98, 100 S.Ct. at 566, 567, 62 L.Ed.2d at 500, 501-02 (citations omitted). In Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 105, 107 S.Ct. 1026, 1029, 94 L.Ed.2d 92, 100-01 (1987), the United States Supreme Court considered whether a California court could exert jurisdiction over Asahi Metal Industry Co., Ltd. (Asahi), a Japanese producer of tire valve assemblies that sold its products to a Taiwanese tire manufacturer. An individual injured when he lost control of his motorcycle in California sued the Taiwanese manufacturer in the State, alleging that the cycle's tire, tube, and sealant were defective. Asahi, 480 U.S. at 105-06, 107 S.Ct. at 1029, 94 L.Ed.2d at 100. The Taiwanese tire manufacturer then cross-claimed against Asahi. Asahi, 480 U.S. at 106, 107 S.Ct. at 1029, 94 L.Ed.2d at 100. The Asahi Court split over whether Asahi satisfied the purposeful availment requirement, thereby attaining sufficient minimum contacts with California. In one plurality opinion, Justice Sandra Day O'Connor, joined by three of the other Justices, adopted the view that mere awareness that the stream of commerce might sweep Asahi's products into the forum state did not constitute purposeful availment. Justice O'Connor explained: 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. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State. Asahi, 480 U.S. at 112, 107 S.Ct. at 1032, 94 L.Ed.2d at 104 (plurality opinion). In a second plurality opinion, Justice William Brennan, joined by three Justices, disagreed with Justice O'Connor's position, concluding that Asahi's mere placement of a product into the stream of commerce was purposeful availment and therefore sufficient to satisfy the minimum contacts standard. According to Justice Brennan, [t]he stream of commerce refers to not unpredictable currents or eddies, but to the regular and anticipated flow of products from manufacture to distribution to retail sale. As long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise. Asahi, 480 U.S. at 117, 107 S.Ct. at 1034, 94 L.Ed.2d at 107 (plurality opinion). Notwithstanding the Justices' disagreement over whether the Asahi company satisfied the purposeful availment requirement, the Asahi Court held ultimately that the exercise of jurisdiction by a California court would offend traditional notions of fair play and substantial justice, thus making the exercise of jurisdiction constitutionally unreasonable. 480 U.S. at 116, 107 S.Ct. at 1034, 94 L.Ed.2d at 107. Among the factors considered by the United States Supreme Court to determine whether the exercise of jurisdiction would be constitutionally reasonable were the burden on the defendant, the interests of the forum State, and the plaintiff's interest in obtaining relief. Asahi, 480 U.S. at 113, 107 S.Ct. at 1033, 94 L.Ed.2d at 105. It also considered the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies. Id. We consider Justice O'Connor's opinion in Asahi, advocating what we shall term the stream-of-commerce-plus theory, to be more persuasive than Justice Brennan's opinion in that case with regard to what constitutes purposeful availment. Indeed, Justice O'Connor's opinion is most consistent with the Court's earlier pronouncements in such cases as Burger King Corp. and World-Wide Volkswagen Corp., supra . Moreover, the majority of federal and state courts have not adopted the more lenient theory of personal jurisdiction advanced by Justice Brennan. See, e.g., Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 683 (1 st Cir.1992) ([T]hose circuits that have squarely addressed the stream-of-commerce issue since Asahi have adopted Justice O'Connor's plurality view.); Alison G. Myhra, Civil Procedure, 39 TEX. TECH. L.REV. 689, 706 n. 120 (2007) (surveying cases); see also Luv N' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 474 (5th Cir. 2006) (DeMoss, J., specially concurring) (Justice O'Connor's stream-of-commerce-plus theory is the more constitutionally defensible of the two theories of minimum contacts to emerge from Asahi. ). For example, in Boit the United States Court of Appeals for the First Circuit held that a foreign manufacturer's sale of its products to a mail-order company, which later sold those products in the forum state, did not support the exercise of personal jurisdiction over the foreign manufacturer. 967 F.2d at 683. Mere awareness that the foreign manufacturer's products might end up in the forum state through the mail, the court held, did not constitute purposeful availment. Id. Similar to Boit, the Fourth Circuit held in Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939 (4th Cir.1994), that a Massachusetts manufacturer's sale of cigarette filters to a cigarette company, with plants in Kentucky and New Jersey, that then distributed those filters nationally in its Kent brand of cigarettes, was insufficient to support jurisdiction in Maryland. The Lesnick court stated: The touchstone of the minimum contacts analysis remains that an out-of-state person have engaged in some activity purposefully directed toward the forum state .... To permit a state to assert jurisdiction over any person in the country whose product is sold in the state simply because a person must expect that to happen destroys the notion of individual sovereignties inherent in our system of federalism. 35 F.3d at 945 (emphasis added). In recognizing the stream-of-commerce-plus theory, we also acknowledge that the theory is consistent with the Court of Special Appeals' analysis in Hollingsworth v. Connor, 136 Md.App. 91, 764 A.2d 318 (2000). Hollingsworth concerned the same facts as in Lesnick, supra . In holding that the Circuit Court for Baltimore City could not justifiably exercise jurisdiction over the defendant, H & V, located in Massachusetts, the intermediate appellate court recognized that H & V did no more than place its products into the stream of commerce. Hollingsworth, 136 Md.App. at 114-15, 764 A.2d at 330-31. The court stated that [a]lthough it is reasonable to assume that H & V was aware that its filters, as components of Kent cigarettes, would be purchased and smoked within the State of Maryland, this will not suffice to establish minimum contacts. Hollingsworth, 136 Md.App. at 114, 764 A.2d at 331. Turning now to the instant case, we disagree with the Court of Special Appeals' reliance, in the proceedings below, on Kopke, supra, a case decided by the Wisconsin Supreme Court. See Taylor, 181 Md.App. at 384-85, 956 A.2d at 766-67. The intermediate appellate court held that CSR's packaging and shipping of asbestos, during which it identified the contents and port destination of Baltimore, [was] tantamount to the kind of purposeful distribution of goods that the Kopke court concluded supported a finding of sufficient minimum contacts. Taylor, 181 Md.App. at 385, 956 A.2d at 767. In Kopke, a Wisconsin truck driver was injured when a pallet loaded with paper fell on him while he was unloading an ocean-going container that allegedly had been negligently packed by an Italian loading company. 629 N.W.2d at 666-67. In contrast to the Kopke court, we do not consider cargo introduced into the stream of commerce with the expectation that it w[ill] arrive in th[e] forum, 629 N.W.2d at 675, sufficient to constitute purposeful availment in Maryland. [11] To satisfy the purposeful availment requirement in Maryland, mere foreseeability that a defendant's products will enter the State and cause injury here is insufficient. Bond, 391 Md. at 730, 895 A.2d at 1005. Rather, the defendant must create a `substantial connection' with Maryland such that having to defend a lawsuit in the State would be foreseeable. See Burger King Corp., 471 U.S. at 475, 105 S.Ct. at 2184, 85 L.Ed.2d at 542. A substantial connection is forged where the defendant either engages in significant activities in the State or creates continuing obligations with the State's residents, thus taking advantage of the benefits and protections of Maryland law. Burger King Corp., 471 U.S. at 475-76, 105 S.Ct. at 2184, 85 L.Ed.2d at 543. Designing [a] product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State exemplify purposeful availment. See Asahi, 480 U.S. at 112, 107 S.Ct. at 1032, 94 L.Ed.2d at 104 (plurality opinion); see also, e.g., Wilson, 337 Md. 541, 654 A.2d 1324 (holding that a Maryland court could exercise jurisdiction over an out-of-state hospital that provided services to Maryland residents and registered as a Maryland provider, designating itself as a liver transplant referral center); Mohamed, 279 Md. at 659, 370 A.2d at 554 (holding that a Maryland court could exert jurisdiction over a Kentucky resident whose agent engaged in intensive negotiations with a temporary resident of Maryland to resolve a contract dispute); Harris v. Arlen Properties, 256 Md. 185, 260 A.2d 22 (1969) (holding that a Maryland court could exercise jurisdiction over an out-of-state real estate development company that scouted potential development sites in Maryland and, through its agents, filed a building permit in the State and arranged for the Washington Suburban Sanitation Commission to install a storm drain). Purposeful availment, however, will not arise from `random,' `fortuitous,' or `attenuated' contacts, or [from] the `unilateral activity of another party or a third person.' Burger King Corp., 471 U.S. at 475, 105 S.Ct. at 2183, 85 L.Ed.2d at 542 (citations omitted); see also Bond, 391 Md. at 731, 895 A.2d at 1005 (holding that a Maryland court could not exercise jurisdiction over an Ohio lawyer when a Maryland client initiated five of seven contacts with the lawyer, the parties created the attorney-client relationship in Ohio, and the attorney-client relationship involved only events in, and the law of, Ohio). We shall analyze all of CSR's contacts with Maryland in light of our standard for purposeful availment. A. Shipments of Asbestos The first contact that we shall analyze is CSR's use of the Port as a conduit in shipping raw asbestos to United States consumers located outside of Maryland. Again, in determining whether such activity constitutes purposeful availment, we look for the presence of a substantial connection between the defendant and the forum state, manifested either by engaging in significant activities in the state or creating continuing obligations with the state's residents. CSR's shipments of raw asbestos do not satisfy the purposeful availment requirement because CSR neither engaged in significant activities in Maryland nor created continuing obligations with residents of the State. With respect to our conclusion that CSR did not engage in significant activities in Maryland, we observe that CSR did not maintain a place of business in Maryland, nor was the company licensed to do business in the State. In addition, Respondents have not demonstrated that any agents of CSR conducted activities in Maryland. Although CSR's asbestos products allegedly caused injury here, the site of the effect of the injury is not relevant to our analysis. Indeed, as this Court acknowledged in Bond, the effect of the injury analysis is not a sufficient benchmark for exercising personal jurisdiction. Burger King Corp., 471 U.S. at 471-76, 105 S.Ct. at 2174, 85 L.Ed.2d 528. [T]he constitutional touchstone remains whether the defendant purposefully established minimum contacts in the forum State. Although it has been argued that foreseeability of causing injury in another State should be sufficient to establish such contacts there when policy considerations so require,[ ] the [United States Supreme] Court has consistently held that this kind of foreseeability is not a sufficient benchmark for exercising personal jurisdiction. Instead, the foreseeability that is critical to due process analysis [ ] is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.... Burger King Corp., 471 U.S. at 474-76, 105 S.Ct. at 2183, 85 L.Ed.2d at 542. 391 Md. at 730, 895 A.2d at 1005. As to our conclusion that CSR did not create continuing obligations with any Maryland residents, we note that Respondents have not demonstrated the existence of a relationship between either CSR and any consumers of asbestos in Maryland or CSR and the Maryland stevedores. In Camelback II we stated that [o]rdinarily, one who purposefully sends a product into another jurisdiction for purposes of sale may reasonably expect to be haled into court in that State if the product proves to be defective and causes injury there. 312 Md. at 340, 539 A.2d at 1112 (emphasis added) (footnote omitted). Here, however, Respondents have not demonstrated that CSR shipped asbestos products to any Maryland consumers; instead, CSR used the Maryland Port as a conduit in shipping asbestos to consumers located outside of the State, in locations such as New York. Although our statement in Camelback II would support hailing CSR into a New York court, that statement is irrelevant to whether the Circuit Court for Baltimore City may justifiably exercise jurisdiction over CSR in the case sub judice. In addition, although Respondents' maritime expert, Captain Robert Stewart, stated that CSR was responsible for paying freight charges, including the costs of hiring a stevedore company, it is not apparent that CSR actually hired the stevedore company. Rather, it is more likely that CSR paid freight charges to a carrier that then contracted with the stevedores who worked at the Maryland Port. `The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.' Bond, 391 Md. at 731, 895 A.2d at 1005 (quoting Hanson, 357 U.S. at 253, 78 S.Ct. at 1239-40, 2 L.Ed.2d at 1298). Furthermore, it is relevant to our analysis that CSR's act of shipping asbestos into the Port was not done at the company's behest. Rather, the company's customers, all of which were located outside of Maryland, directed CSR where to make the asbestos shipments. [12] In Bond, supra, this Court considered whether the communications of an Ohio attorney with a Maryland resident sufficed to establish sufficient minimum contacts with the State of Maryland. The relevant contacts by Messerman [the Ohio lawyer] with Bond [the Maryland resident] consisted of the alleged provision of legal advice by telephone and letters concerning the effect of and/or need for expungement of Ohio juvenile proceedings. Id. In holding that Messerman, the Ohio lawyer, was not subject to the jurisdiction of the Maryland courts, we emphasized that: [t]he number of contacts over nine years were few and the number of those initiated by Messerman were fewer still.... [O]nly two of the seven relevant contacts were initiated by Messerman: Messerman sent two letters to Bond in Maryland  one in January of 1986 and one in May of 1994. The other five contacts were commenced by Bond. Id. (citations omitted). Similar to the attorney in Bond, CSR's asbestos-related contacts with Maryland were initiated by other parties  here, non-Maryland consumers  and the unilateral activity of a third party is not a grounds for conferring personal jurisdiction. Thus, we hold that CSR's use of the Port as a conduit in shipping raw asbestos to a non-Maryland ultimate destination and user does not suffice to establish the defendant's purposeful availment. In concluding that CSR's use of the Port in supplying raw asbestos to United States customers does not amount to purposeful availment, we need not consider the specific effect of CSR's participation in three C.I.F. arrangements during the period when Smith and Anzulis worked at the Port. Captain Stewart expressed the opinion that, under a C.I.F. agreement, CSR would have access to the Maryland courts if its goods were unjustifiably rejected. Accordingly, there is potential for the assertion that such court access constitutes CSR's taking advantage of the benefits and protections of Maryland law, thus satisfying the purposeful availment requirement and, ultimately, due process concerns. In other words, Captain Stewart's characterization of CSR's participation in the three C.I.F. arrangements evokes the question of whether potential offensive use of the Maryland courts by CSR justifies the defensive use of those courts against the company. We conclude that it does not, as settled Maryland law contradicts Captain Stewart's observations regarding what a C.I.F. agreement entails; specifically, the presence of a C.I.F. agreement bears no relevance as to where a seller may sue a buyer that unjustifiably rejects the seller's goods. For instance, the provision of the Maryland Code governing C.I.F. agreements, Md.Code (1975, 2002 Repl.Vol.), § 2-320 of the Commercial Law Article (C.I.F. and C. & F. terms), [13] is silent as to what a seller's remedies are if its goods are rejected. Moreover, under a C.I.F. contract, the buyer pays the price of the goods prior to their arrival at the port of destination, thus obviating the need for the seller to sue the buyer in the jurisdiction where the goods are rejected. See Official Comment 1 to Md.Code (1974, 2002 Repl.Vol.), § 2-320 of the Commercial Law Article. The Official Comment to § 2-320 thus provides: Under a C.I.F. contract the buyer, as under the common law, must pay the price upon tender of the required documents without first inspecting the goods, but his payment in these circumstances does not constitute an acceptance of the goods nor does it impair his right of subsequent inspection or his options and remedies in the case of improper delivery. All remedies and rights for the seller's breach are reserved to him. The buyer must pay before inspection and assert his remedy against the seller afterward unless the nonconformity of the goods amounts to a real failure of consideration, since the purpose of choosing this form of contract is to give the seller protection against the buyer's unjustifiable rejection of the goods at a distant port of destination which would necessitate taking possession of the goods and suing the buyer there. Id. at Official Comment 12 (emphasis added). B. Shipments of Sugar Next in our analysis of CSR's contacts with Maryland, we shall consider whether CSR's shipments of sugar into the Maryland Port satisfy the purposeful availment requirement. Like CSR's shipments of raw asbestos, Respondents have not demonstrated that CSR shipped sugar to, or engaged in business with, any consumers in Maryland. [14] Moreover, although substantial in amount and value, the record indicates that the Australian government directed the sugar shipments pursuant to the Sugar Acquisition Act of 1915, controlling all facets of production and distribution. We consider the role of the Australian government tantamount to the unilateral activity of a third party, which, again, does not suffice to demonstrate a defendant's purposeful availment. C. Advertising The final contacts that we shall consider are CSR's acts of advertising asbestos products in the Asbestos trade publication. In the Circuit Court, Respondents produced the affidavit of Dr. Barry Castleman, who observed that CSR regularly advertised the sale of asbestos products in the Asbestos publication during the period when Smith and Anzulis worked at the Port. Dr. Castleman also expressed the opinion that CSR would have known that such advertisements would reach potential consumers in Maryland. In Camelback II, this Court considered advertising efforts similar to those of CSR in determining whether the exercise of jurisdiction over an out-of-state defendant would comport with due process. 312 Md. 330, 539 A.2d 1107. In that case, the defendant, a Pennsylvania ski resort, supplied brochures to ski shops in Maryland and provided a toll-free telephone number by which Maryland residents, among others, could obtain information about snow conditions. Camelback II, 312 Md. at 333-34, 539 A.2d at 1108-09. In addition, the defendant was aware that wire services carried information concerning snow conditions at the resort and that such information was reproduced in Maryland newspapers. Camelback II, 312 Md. at 341, 539 A.2d at 1112. We declined to hold that the defendant's advertising-related contacts met the standard for purposeful availment, as [the resort] did not devote its energy or financial resources to the marketing of Maryland. Camelback II, 312 Md. at 341, 539 A.2d at 1112. Similarly, in the case sub judice, CSR did not target its advertising efforts toward potential consumers in Maryland; it advertised asbestos products in a general trade publication, and although it was foreseeable that such advertisements would be viewed in Maryland, that fact alone is not sufficient to confer jurisdiction in light of Camelback II.