Court Opinion

ID: 2704949
Source: CourtListenerOpinion
Date Created: 2014-08-04 22:11:09.712924+00
Date Added: 2024-06-11T12:33:41.075682
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
                IN AND FOR NEW CASTLE COUNTY

SHAREIF ALI, as personal representative      )
of the Estate of Ameer Ali, and JOY ANN      )
MERRIFIELD, as personal representative       )
of the Estate of Emily Lewis,                )
                                             )
             Plaintiffs,                     )
                                             )
             v.                              )      C.A. No.: N11C-12-253 FSS
                                             )
BEECHCRAFT CORPORATION, et al,               )
                                             )
             Defendants.                     )

                             Submitted: March 7, 2014
                              Decided: June 30, 2014

                                     ORDER

         Upon Defendant Beechcraft Corporation’s Motion to Dismiss
                    for Lack of Personal Jurisdiction –
                                GRANTED

             This personal injury case stems from an airplane crash on January 21,

2010 in Alaska. Shortly after takeoff, engine failure caused Decedents’ airplane to

roll left fatally. Plaintiffs are Decedents’ representatives. Defendants manufactured

the airplane and its components. Now, Beechcraft Corporation claims its minimal

Delaware contacts are not enough to subject it to general personal jurisdiction here.

Hence, this motion to dismiss.
                                              I.

                 Plaintiffs filed suit on December 30, 2011. On November 26, 2013,

Beechcraft moved to dismiss for lack of personal jurisdiction. The court held oral

argument March 7, 2014.

                                             II.

                 As mentioned, Beechcraft argues it does not have minimum contacts

with Delaware and defending here is unreasonable. As this case involves a crash in

Alaska, involving Alaskans, and Defendant is a Kansas corporation, this is not a

specific jurisdiction case. Rather, under Delaware’s long-arm statute, Plaintiff must

prove Defendant “engages in [a] persistent course of conduct in the State or derives

substantial revenue from ... the State.”1 Specifically, Beechcraft argues:

                  BC has no agents, distributors, dealers, employees,
                  officers, or directors in Delaware. At no time has BC
                  maintained real estate, bank accounts, or other interest in
                  property in Delaware. BC does not maintain company
                  records in Delaware, and does not hold meetings of
                  shareholders, directors or officers in Delaware. From
                  2003-present, BC’s sales of goods to Delaware customers
                  have accounted for less than one percent of BC’s total
                  sales.... Nor has BC paid, or incurred any obligation to
                  pay, taxes in Delaware since at least March 2007.

Because Defendant does not have continuous and systematic contacts with Delaware,

requiring it to defend itself here is unreasonable.
1
    10 Del.C. § 3104(c)(4).

                                              2
             Predictably, Plaintiffs counter Defendant’s contacts are significant,

establishing general jurisdiction. Specifically, Plaintiffs allege Defendant delivered

five aircraft to Delaware customers since 2007, for $46,425,833.00. Federal Aviation

Administration public records show that 1,436 Beechcraft aircraft are registered in

Delaware. Further, Beechcraft has made 34,549 direct mailings to Delaware

addresses from 2003-2013. Most persuasively, Plaintiff alleges Defendant, not its

subsidiary, Hawker Beechcraft Services, maintains a 60,000-foot facility for goods,

services, and customer support in Wilmington, Delaware. Each invoice from the

Wilmington facility showed payment was made to Defendant, not the subsidiary.

These invoices total $8,809,053.94 in Delaware revenue from May 2012 to December

2013. Further, the Wilmington facility’s general manager was hired by Defendant.

Essentially, Plaintiffs argue the subsidiary is, at least, an alter ego of Defendant. As

the subsidiary is subject to general jurisdiction, Defendant should be also.

                                          III.

             Before discussing the core dispute, some procedural background is

important. This case was originally filed against, among others, Hawker Beechcraft,

Inc., a Delaware corporation, and Raytheon Company. In May 2012, Hawker

Beechcraft Inc. filed for bankruptcy. Plaintiff alleges it emerged as Beechcraft

Corporation. Defendants, however, disagree. Regardless, the parties later stipulated

                                           3
to substitute Beechcraft Corporation for those Defendants, stating “Beechcraft

Corporation covenants ... it is the successor in interest and continuation of Beech

Aircraft Company and Raytheon Aircraft Company.”

                In pertinent part, the stipulation also provides “there will be no statute

of limitation defense asserted ... [but] [a]ll other defenses are preserved.” Plaintiffs

never argued in their briefs or at oral argument that the stipulation’s defenses

preservation applies to personal jurisdiction, nor that jurisdiction over Beechcraft was

created by agreement. So, there is no reason not to apply traditional personal

jurisdiction.

                                             IV.

                Plaintiffs bear the burden of establishing personal jurisdiction on a

motion to dismiss.2 As discussed, the parties agree specific jurisdiction is not

applicable. General jurisdiction requires a two-step inquiry.3 First, is jurisdiction

appropriate under Delaware’s long-arm statute?4 Second, would asserting jurisdiction

violate due process?

                                             A.

                Long-arm jurisdiction applies to one who “regularly does or solicits

business, engages in any other persistent course of conduct in the State or derives
2
  Boone v. Oy Partek, 724 A.2d 1150 (Del. Super. 1997).
3
  Id.
4
  10 Del.C. § 3104.

                                              4
substantial revenue from services, or things used or consumed in the State.” 5 Further,

a defendant’s contacts with Delaware must be current.6

                 Section 3104(c)(4) is derived almost completely from § 1.03(a)(4) of the

Uniform Interstate and International Procedure Act.7 The comment to this subsection

provides, “A sufficient nexus exists if (a) the defendant regularly advertises his

products or services in the state or (b) carries on some other continuous course of

activity there or (c) derives substantial revenue from goods used or consumed or from

services rendered in the state. It is not necessary that this activity amount to the doing

of business.”8 Further, the statute should be construed broadly to confer jurisdiction

to the maximum extent possible.9

                 Defendant admittedly has made sales to Delaware customers averaging

$6.6 million a year, which may be considered “substantial revenue.” Defendant also

regularly mails technical publications and safety manuals to Delaware addresses. “It

is the pattern of regular solicitation which makes [Defendant] susceptible to assertion

of jurisdiction.”10 Where a company solicits business to the country as a whole, has

5
  10 Del.C. § 3104(c)(4).
6
  Boone, 724 A.2d at 1156.
7
  Waters v. Deutz Corp., 479 A.2d 273, 275 (Del. 1984).
8
    Id. citing 13 U.L.A. § 1.03 (1980).
9
    LaNuova D & B, S.p.A. v. Bowe Co., Inc., 513 A.2d 764, 768 (Del. 1986).
10
     Gerber v. Young, 1987 WL 9670 (Del. Super. 1987).

                                                5
made sales in Delaware deriving substantial revenue, and conducted this activity for

over a decade, section 3104(c)(4) is satisfied.11

                                              B.

              Having found Delaware’s long-arm statute covers Beechcraft’s Delaware

business, the court turns to due process. Federal due process is a check on a state’s

long-arm jurisdiction. But for due process constraints, by advertising nationally a

business would subject itself to suit almost anywhere even if, as it is here, none of the

parties or facts has a real tie to the litigation forum. Due process permits personal

jurisdiction if an out-of-state defendant has “certain minimum contacts with [the

state] such that the maintenance of the suit does not offend ‘traditional notions of fair

play and substantial justice.’” 12 Essentially, the court may only exercise general

jurisdiction when a defendant’s contacts with Delaware are “so continuous and

systematic as to render [defendant] essentially at home in the forum state.”13 To

underscore its point, Beechcraft emphasized at oral argument that general jurisdiction

here means it is subject to suit in Delaware for any future case. The standard,

accordingly, is a high one.

11
   Boone, 724 A.2d at 1158.
12
   Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310,
316 (1945) citing Milliken v. Meyer, 311 U.S. 457, 463 (1940).
13
   Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011).

                                              6
               Plaintiffs’ strongest argument, as mentioned, is that Beechcraft’s

subsidiary, Hawker Beechcraft Services, which indisputably does business in

Delaware, is Defendant’s alter ego. Plaintiff asserts Delaware customers paid

Defendant directly for the subsidiary’s goods. Plaintiff also argues an employee of

the subsidiary employee testified both Defendant and its subsidiary use the trade

name “Beechcraft” and his initial employment paperwork suggested he was hired by

Defendant. Best of all is that funds passed directly to the parent. Individually and

collectively those random facts do not suffice. But, assuming they did, this court

simply does not have subject-matter jurisdiction to pierce the corporate veil.14

               Plaintiffs next argue the subsidiary’s Delaware contacts should be

imputed to Defendant. The United States Supreme Court, addressing a similar

situation in Daimler AG v. Bauman,15 held even assuming the subsidiary was subject

to general jurisdiction in the forum state and the subsidiary’s contacts were imputable

to the parent, that alone is not enough to subject the parent to general jurisdiction.16

Further, in Daimler, the subsidiary and parent’s contacts to the forum were

significantly higher than the subsidiary and Defendant’s contacts are to Delaware

14
   Sonne v. Sacks, 314 A.2d 194 (Del. 1973).
15
   134 S.Ct. 746 (2014).
16
   Id. at 760 (“Even if we were to assume that MBUSA is at home in California, and further to
assume MBUSA's contacts are imputable to Daimler, there would still be no basis to subject
Daimler to general jurisdiction in California, for Daimler's slim contacts with the State hardly
render it at home there.”)
                                                  7
here. Accordingly, Plaintiffs must establish personal jurisdiction over Defendant in

its own right, without regard to the subsidiary’s contacts.

               Daimler was no sea change.17 Daimler, affirming Goodyear Dunlop

Tires Operations, S.A. v. Brown,18 held general jurisdiction satisfied due process only

where an entity is incorporated or has a principal place of business within the forum

state.19 Neither criterion is satisfied here.

               Defendant, as a national enterprise, has contacts with every state. As

discussed, only where contacts are continuous and systematic, and where the

defendant is at home in the state, does exercising personal jurisdiction satisfy due

process. As Daimler pointed out, if Defendant’s Delaware activities sufficed to allow

general jurisdiction, “the same global reach would presumably be available in every

other State in which [the subsidiary’s] sales are sizeable.”20

               Accordingly, deciding what constitutes substantial contacts requires both

an absolute and a relative analysis.21 Defendant’s contacts to Delaware are minimal,

especially when viewed relative to its national network. The five airplanes Defendant

sold in Delaware total less than one percent of Defendant’s total sales. Less than one
17
   E.g. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. —, 131 S.Ct. 2846 (2011);
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).
18
   564 U.S. —, 131 S.Ct. 2846 (2011).
19
   Id. at 761 (“The paradigm all-purpose forums for general jurisdiction are a corporation's place
of incorporation and principal place of business.)”
20
   Id.
21
   E.g. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 199 (2d Cir. 1990); Stewart v.
Bus & Car Co., 293 F. Supp. 577, 583 (N.D. Ohio 1968);.
                                                 8
percent of total revenue is insubstantial as a matter of law.22 Similarly, as to the

established Delaware contacts’ triviality, airplanes are built to move beyond the point

of sale. Accordingly, FAA registration records and mailings are similarly unavailing.

                 In summary, the only connections between Beechcraft Corporation and

Delaware are a handful of sales to Delaware customers and legally required mailings

to airplane owners with Delaware mailing addresses. While Defendant owns a

subsidiary with a substantial Delaware facility, neither the facility nor the subsidiary

had anything to do with the crash. Nor do the subsidiary’s contacts have any bearing

on whether exercising general jurisdiction over Beechcraft comports with due

process. Even viewing the record in Plaintiff’s favor, it simply cannot be said that

Beechcraft is “at home” in Delaware.

                 For the above reasons, Defendant Beechcraft Corporation’s Motion to

Dismiss is GRANTED.

                 IT IS SO ORDERED.

                                                               /s/ Fred S. Silverman
                                                                    Judge

cc:       Prothonotary (Civil)                       Justin P. Callaway, Esquire
          Katherine L. Mayer, Esquire                George Thomas Lees, III, Esquire
          Matthew Rifino, Esquire                    James C. Shroud, Esquire
          Sally Jean Daugherty, Esquire              Gary W. Aber, Esquire

22
     Bell Helicopter v. C&C Helicopter, 295 F. Supp. 2d 400 (D. Del. 2002).
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