Court Opinion

ID: 4119273
Source: CourtListenerOpinion
Date Created: 2017-01-27 21:05:51.103748+00
Date Added: 2024-06-11T13:29:01.673710
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

CHRISTINA HEDGER, as Administratrix .

of the Estate of Betty J 0 Wilhoite, : C.A. N0. K14C-05-012 WLW
CHRISTINA HEDGER, AMANDA '

WALKER, RICHARD JEWEL, JOHN

WALKER and MATTHEW WALKER,

individually,

Plaintiffs,
v.
MEDLINE INDUSTRIES, INC. and
ALLMED MEDICAL PRODUCTS CO.,
LTD.,

Defendants.

Submitted: October 14, 2016
Decided: January 27, 2017

ORDER
Upon Defendant Allmed Medical Products Co., Ltd.’s
Motion to Dismiss for Lack of Personal Jurisdiction.

Dem'ed Without Prejudice.

Gregory A. Morris, Esquire of Liguori & Morris, Dover, Delaware; attorney for
Plaintiffs.

Robert K. Beste, III, Esquire of Smith Katzenstein & Jenkins LLP, Wilrnington,
Delaware; attorney for Defendant Allmed Medical Products Co., Ltd.

WITHAM, R.J.

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

Before the Court are motions1 to dismiss filed by Defendant Allmed Medical
Products Co., Ltd. (“Allmed”). The motions are opposed by the Plaintiffs. The
codefendant, Medline Industries, Inc., has not filed a response. This is the Court’s
decision on the motions.

The motions raise two legal questions:

(l) Have the Plaintiff`s established personal jurisdiction over Allmed? and

(2) If the Plaintiffs have not done so, should the Court allow the Plaintiffs
jurisdictional discovery anyway?

The Court answers the first question in the negative and the second question
in the affirmative While the Plaintiffs have failed to establish personal jurisdiction
over Allmed in their complaints, they are entitled to limited discovery to help them
establish a basis for jurisdiction The Court does not address Allmed’s claims of
insufficiency of process and of service of process because they appear to have been
abandoned in its briefs.

Allmed’s motions to dismiss the complaints against it for lack of personal
jurisdiction are DENIED WITHOUT PREJUDICE. The Plaintiffs’ request for
limited jurisdictional discovery is GRANTED.

FACTS AND PROCEDURAL HISTORY

The Court looks primarily to the complaints in resolving these motions.2

 

l This decision refers to “motions” and “complaints” in the plural because Allmed’s brief
addressed motions to dismiss filed in two consolidated actions: this one and No. Kl4C-12-035.

2 This is based on the standard of review, discussed inf)"a, and the Plaintif`f`s’ election not to
supplement the allegations in their complaint With a clear theory of jurisdiction.

2

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

The complaints allege that Allmed is a Chinese corporation doing business
within the State of Delaware. Allmed and its co-defendant, Medline Industries Inc.
(“Medline”), manufactured, sold, and distributed tracheostomy care kits.

One of those kits was eventually sold and distributed to a resident of Delaware.
That resident was Betty Jo Wilhoite, the Plaintiffs’ decedent. Ms. Wilhoite’s
husband, Brian Wilhoite, was using one of Allmed’s tracheostomy care kits to clean
Ms. Wilhoite’s tracheostomy when the cotton swab applicator came apart. Ms.
Wilhoite suffocated and died as a result of the product’s failure. The Court infers that
the entire incident took place in the Wilhoites’ home in Dover, Delaware.

The complaints’ allegations pursue theories of negligence, breach of express
warranty, and breach of implied warranty. They give no hint of where the products
were sold or purchased

Allmed filed motions to dismiss in both actions. In its motions, Allmed
introduces new facts based on a declaration by Ruby Qiu, Assistant to the General
Manager and Legal Supervisor in the Sales Department of Allmed. Some of the new
facts contradict those set out in the complaints.

The declaration explains that Allmed is a Hong Kong corporation with its
principal place of` business in China. Allmed has no significant ties to the State of
Delaware. Allmed and Medline have a manufacturer/distributor relationship:
Medline is an independent distributor, and Allmed exercises no control or direction

over it. Instead, Allmed sells the tracheostomy care kits it manufactures to Medline

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

in China, and title passes in that country.3 Medline then arranges shipment from
China primarily to Lathrop, California, and also to other U.S. locations, not including
Delaware.

This is the Court’s ruling on Allmed’s motions to dismiss.

THE PARTIES’ CONTENTIONS

Allmed contends that no section of Delaware’s long-arm statute confers
jurisdiction over Allmed and that “dual jurisdiction” is not viable in this case. lf the
Plaintiffs are allowed to engage in jurisdictional discovery, Allmed argues, that
discovery should be strictly limited.

The Plaintiffs respond that the allegations in the complaint are sufficient to
suggest general, specific, and dual jurisdiction over Allmed. The Plaintiffs request

77 44

“full jurisdictional discovery to explore and potentially confirm or refute the
extensive facts set forth” in Ms. Qiu’s declaration.
STANDARD OF REVIEW
As a general matter, when a defendant files a motion to dismiss for lack of
personal jurisdiction under Superior Court Civil Rule l2(b)(2), it is the plaintiffs
burden to demonstrate that there is a basis for the court to exercise jurisdiction over

a nonresident defendant.4 When a motion is decided without the benefit of an

evidentiary hearing or jurisdictional discovery, however, the plaintiff has a lower

 

3 Title passes in China, the declaration contends, by virtue of` the products being sold free on
board from three cities in China. See generally 6 Del. C. §2-319.

4 Brewer v. Peak Performance Nutrients Inc., No. K12C-04-008, 2012 WL 3861 169, at *l
(Del. Super. Aug. 16, 2012).

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

burden.5 Even though the plaintiff may rely on the allegations in the complaint to
show a prima facie case for jurisdiction, “a plaintiff does not have the burden to plead
in its complaint facts establishing the court’s personal jurisdiction over [the]
defendant.”6 For that very reason, “[i]f the facts alleged in the complaint are
insufficient to establish personal jurisdiction over the defendants, then the trial court
may allow the plaintiff to complete discovery in order to establish jurisdiction over
defendant as long as plaintiff’s claim of personal jurisdiction is not frivolous.”7
“Discovery is not appropriate so plaintiffs ‘can fish for a possible basis for the court’s
jurisdiction. Before ordering personal jurisdiction discovery there must be at least
“some indication that this particular defendant is amenable to suit in this forum.””’8
DISCUSSION
I. The Law of Personal Jurisdiction

“Personal jurisdiction refers to the court’s power over the parties in the

dispute.”9 The court engages in a two-step analysis to determine whether it has

 

5 Lake Treasure Hola'ings, Ltd. v. Foundry Hill GP LLC, No. 6546-VCL, 2013 WL 6184066,
at *1 (Del. Ch. Nov. 21, 2013) (quoting Sprint Nextel Corp. v. iPCS, Inc. , No. 3746-VCP, 2008 WL
2737409, at *5 (Del. Ch. July 14, 2008)).

6 Benerofe v. Cha, No. 14614, 1996 WL 53 5405, at *3 (Del. Ch. Sept. 12, 1996) (citing Hart
Hola'ing C0. Inc. v. Drexel Burnham Lambert Inc., 593 A.2d 53 5, 538 (1991)).

7 Benerofe, 1996 WL 535405, at *3 (citing Hart, 593 A.2d at 541).

8 ln re Arctic Ease, LLC, No. 8932-VCMR, 2016 WL 7174668, at *5 n.50 (Del. Ch. Dec. 9,
2016) (quoting In re Am. Im"l Grp., Inc., 965 A.2d 763, 831 n.l95 (Del. Ch. 2009)).

9 Genuine Parts Co. v. Cepec, 137 A.3d 123, 129 (Del. 2016) (citing RuhrgasAG v.
Marathon Oil Co., 526 U.S. 574, 577 (1999)).

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

personal jurisdiction over a nonresident defendant.10 “First, the court . . . determine[s]
whether Delaware’s long[-]arm statute, 10 Del. C. § 3104(c), is applicable.”11
Second, if the statute is applicable, the court determines whether the exercise of
jurisdiction would violate due process.12

Personal jurisdiction can spring from two bases. The first basis, general
jurisdiction, allows a court “to ‘assert [ ] jurisdiction over a nonresident defendant on
the basis of wholly unrelated contacts with the forum.”’13 Constitutionally, a court
may exercise general jurisdiction over a corporation where the “corporation’s
affiliations with the State are so ‘continuous and systematic’ as to render [it]

essentially at home in the forum State.”14

Paradigmatically, a corporation is
“essentially at home” in its place of incorporation and its principal place of business. 15

The second basis, specific jurisdiction, exists when “the ‘suit aris[es] out of or
relate[s] to the [corporation’s] contacts with the forum.”’16

Delaware’s long-arm statute provides as follows:

 

10 Matthew v. Flc`ikt Wooa's Group SA, 56 A.3d 1023, 1027 (Del. 2012).
11 Id.
12 Id.

13 Genuine Parts, 137 A.3d at 129 (alteration in original) (quoting Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 426 (1984) (Brennan, J., dissenting)).

14 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (201 1)(quoting1m"l
Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)).

15 Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014) (citing Brilmayer et al., A General
L00k at General Jurisdiction, 66 Tex. L. Rev. 721, 735 (1988)).

16 Genuine Parts, 137 A.3d at 130 (quoting Helicopteros, 466 U.S. at 414 n.8).

6

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

(c) As to a cause of action brought by any person arising from any of the
acts enumerated in this section, a court may exercise personal
jurisdiction over any nonresident, or a personal representative, who in
person or through an agent:

(1) Transacts any business or performs any character of work or service
in the State;

(2) Contracts to supply services or things in this State;

(3) Causes tortious injury in the State by an act or omission in this State;
(4) Causes tortious injury in the State or outside of the State by an act or
omission outside the State if the person regularly does or solicits
business, engages in any other persistent course of conduct in the State
or derives substantial revenue from services, or things used or consumed
in the State . . . .17

The sections of Delaware’s long-arm statute can be grouped according to
whether they are grants of specific or general jurisdiction.18 “Sections 3104(c)(l),
(c)(2), and (c)(3) have been deemed to be specific jurisdiction provisions.”19 “Section
3104(0)(4) . . . has been deemed a general jurisdiction provision.”20

In 1986, the Delaware Supreme Court remarked in a footnote that

It is conceivable that a tort claim could enjoy a dual jurisdictional

 

17 10 Del. C. § 3104(c).

18 Boone v. Oy PartekAb, 724 A.2d 1 150, 1 155 (Del. Super. 1997), ajj"a', 707 A.2d 765 (Del.
1998).

19 Ia'. (citing Otokumpu Eng’g Em‘ers., Inc. v. Kvaerner Enviropower, Inc., 685 A.2d 724

(Del. Super. 1996); Colonial Mortg. Serv. Co. v. Aerenson, 603 F. Supp. 323, 327 (D. Del 1985);
Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F. Supp. 1458, 1466 (D. Del. 1991)).

20 Ia'. (citing Outokumpu, 685 A.2d at 727-28; Mayhall v. Nempco, Inc., No. 91C-10-018,
1994 WL 465 545 (Del. Super. July 29, 1994); Chaplake Holdings, Ltd. v. Chrysler Corp. , No. 94C-
04-164, 1995 wL 653510(De1. super. Aug. 11, 1995)).

7

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

basis under (c)(l) and (c)(4) if the indicia of activity set forth under
(c)(4) were sufficiently extensive to reach the transactional level of
(c)(l) and there was a nexus between the tort claim and transaction of
business or performance of work.21
Two decisions of the Superior Court established an interpretation of LaNaova’ s
footnote that permitted the exercise of personal jurisdiction where no one subsection
of § 3104(c) is satisfied: Boone v. Oy Partek Ab22 and Wright v. American Home
Proa'ucts Corj).23 In both cases, the Court adopted a “stream-of-commerce” or “dual
jurisdiction” reading of (c)(l) and (c)(4) of the statute, holding that personal
jurisdiction exists where the plaintiff shows that “(1) ‘there is an intent or purpose on
the part of the [defendant] to serve the Delaware market,’ and (2) that ‘intent or
purpose . . . results in the introduction of the product to [Delaware] and plaintiffs
cause of action arises from injuries caused by that product.”’24
II. The Plaintijj{s Have Not Established A Constitational Basis
for Personal Jurisdiction

The Plaintiffs argue that their complaints “clearly provide[ ] enough alleged

facts [to] establish[ ] Defendant has sufficient contacts to justify specific, general and

 

21 LaNuova D &B, S.p.A. v. Bowe Co., Inc., 513 A.2d 764, 768 n.3 (1986).
22 724 A.2d 1150.

23 78 A.2d 518 (Del. Super. 2000), appeal denied sub nom. Les Laboratoires Servier v.
Wright, 755 A.2d 389 (Table), 2000 WL 975089 (Del. June 5, 2000).

24 Polar Electro Oy. v. Suunto Oy, 829 F.3d 1343, 1352-53 (Fed. Cir. 2016) (alteration in
original) (quoting Boone, 724 A.2d at 1158); Wright, 768 A.2d at 529-30; see also Crane v. Home
Depot, Inc., No. 06C-()3-()34, 2008 WL 2231472, at *4 (Del. Super. May 30, 2008).

8

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

‘dual jurisdiction’ or ‘stream-of-commerce’ jurisdiction.” But there is no non-
frivolous argument for the constitutional exercise of general or specific jurisdiction,
At best, the Plaintiffs have suggested that there may be facts that give rise to
jurisdiction under the stream-of-commerce or dual jurisdiction theory.

A. Statutorjy Basesfor Jurisdiction

Turning first to jurisdiction under the long-arm statute, the Plaintiffs have
pleaded a factual basis for general jurisdiction and for “dual jurisdiction.” No such
basis exists for the exercise of specific jurisdiction, however.

]. General Jurisdiction is Facially Available

To establish general jurisdiction under § 3104(c)(4), the plaintiff must allege
facts to show that the nonresident defendant “regularly does or solicits business,
engages in any other persistent course of conduct in the State or derives substantial
revenue from services, or things used or consumed in the state.” The complaints
allege that Allmed “do[es] business within the State of Delaware.” While not
addressing whether Allmed “regularly” does business within the State, this allegation
is facially sufficient to provide a statutory basis for general jurisdiction. Whether it
passes constitutional muster under the due process clause is a separate matter,
discussed below.

2. Susz`cz'ent Facts Exist to Saggest Dual Jurisdiction

The Plaintiff’s complaints, standing alone, do not allege any facts that would

demonstrate the appropriateness of dual jurisdiction here. But Allmed’s submissions

accompanying its motions to dismiss have provided grounds to suggest (without

Christina Hea'ger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

actually establishing) that dual jurisdiction may exist under the statute.

As restated by the U.S. Court of Appeals for the Federal Circuit, Delaware’s
dual jurisdiction theory requires a showing that “(1) ‘there is an intent or purpose on
the part of the [defendant] to serve the Delaware market,’ and (2) that ‘intent or
purpose . . . results in the introduction of the product to [Delaware] and plaintiffs
cause of action arises from injuries caused by that product.”’25

The Plaintiffs have not pleaded facts in their complaints to suggest that dual
jurisdiction is appropriate. At best, Plaintiffs have alleged that Allmed manufactured,
sold, or distributed~a product and the product somehow ended up in the hands of a
Delaware resident. That is not enough to establish dual jurisdiction.

But the unsworn declaration and manufacturing agreement provided byAllmea'
suggest the factual predicate to dual jurisdiction may be present. According to
Allmed’s submissions, Allmed is a Hong Kong corporation with its principal place
of business in China. lt manufactures all of its products within China. It has never
done business in Delaware. lt sold the type of product in question here, which it
dubbed “sterile procedural trays,” to its codefendant, Medline, free on board from
Wuhan, Shenzen, and Shanghai, China, according to the terms of a manufacturing
agreement with Medline. Allmed did not manufacture these trays for any distributors
besides Medline while the manufacturing agreement was in force. Medline allegedly
arranged shipment to Lathrop, California and some other U.S. locations (Delaware

not included). Allmed, of course, does not concede that these facts show any intent

 

25 Ia'. at 1352-53 (quoting Boone, 724 A.2d at 1158).

10

Christina Hedger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

to serve the Delaware market, nor that such an intent brought the product into
Delaware.

But drawing every reasonable inference in favor of the Plaintiffs, it is arguable
from its own submissions that Allmed had an intent to serve the United States market
in general. The district court has consistently held, at least for purposes of the long-
arrn statute, that “[a] non-resident firm’s intent to serve the United States market is
sufficient to establish an intent to serve the Delaware market, unless there is evidence
that the firm intended to exclude from its marketing and distribution efforts some
portion of the country that includes Delaware.”26 The Court infers from the
allegations in the complaints that the kit arrived in Delaware because of Allmed’s
intent to serve Delaware.

lf the facts from Allmed’s submissions are accepted, they suggest a prima facie
statutory basis for the exercise of personal jurisdiction under the dual jurisdiction
theory. The Court will consider separately the question of whether the exercise of
dual jurisdiction comports with Due Process.

3 . Specifl`c Jurisdiction is Not Available
lt would be frivolous to argue for specific jurisdiction based on the facts

alleged in the complaint.

 

26 DNA Genotek Inc. v. Spectrum DNA, 159 F. Supp. 3d 477, 481 (D. Del. 2016) (alteration
in original) (quoting Power Integrations, Inc. v. BCD Semicona'uctor, 547 F. Supp. 2d 365, 373 (D.
Del. 2008)). But see J. Mclnlyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 886 (2011) (plurality
opinion). The district court’s holdings stand at odds with the plurality opinion in J. Mclnlyre and
cannot fairly be read to provide a sufficient constitutional basis for the exercise of stream-of-
commerce jurisdiction, See J. McInlyre, 564 U.S. at 886.

11

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

No transaction by Allmed is alleged to have occurred in Delaware. Under
(c)(l), a defendant can be subject to personal jurisdiction when the suit arises from
the defendant’ s transacting business or performing “any character of work or Service
in the State.” While the Plaintiffs have alleged that Allmed does business in
Delaware, it has not alleged any nexus between Allmed’s “doing business” and a
transaction by Allmed that occurred within Delaware. The Plaintiffs have not alleged
that any of the acts by Allmed in selling, distributing, or manufacturing the kits
occurred in Delaware. Similarly, no contract was entered into in Delaware. Under
(c)(2), a defendant can be subject to jurisdiction when the suit arises from the
defendant’s contracting “to supply services or things in this State.” There is no
allegation here that any contract was entered into in this State.

Finally, no act or omission is alleged to have occurred in this State. Under
(c)(3), a defendant can be subject to jurisdiction when the suit arises from the
defendant’s causing “tortious injury in the State by an act or omission in this State.”
No such act or omission is alleged here. To the extent acts or omissions constituting
negligence are alleged at all, the Plaintiffs have not alleged where those acts or
omissions occurred.

B. T he Constitutionalily of Exercising Jurisdiction

Having found two possible statutory bases for jurisdiction-general and dual
jurisdiction~the Court must further determine whether the exercise of jurisdiction
under those bases would accord with the Due Process Clause of the Fourteenth

Arnendment. There are no facts to support the constitutional exercise of general

12

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

jurisdiction, nor have the Plaintiffs conclusively established a constitutional basis for
dual jurisdiction

A state court may only exercise personal jurisdiction over a nonresident
defendant when there are “‘minimum contacts’ between the defendant and the forum
State.”27 The emphasis on minimum contacts “protects the defendant against the
burdens of litigating in a distant or inconvenient forum” and “acts to ensure that the
States . . . do not reach out beyond the limits imposed on them by their status as
coequal sovereigns in a federal system.”28

For a court to sustain an exercise of jurisdiction, the defendant must have
minimum contacts “with the forum State . . . such that maintenance of the suit ‘does
not offend “traditional notions of fair play and substantial justice””’29 Among the
factors to be inquired after in determining if it is “reasonable . . . to require the

v30

corporation to defend the particular suit which is brought there are

the burden on the defendant . . . [;] the forum State’s interest in
adjudicating the dispute; the plaintiff" s interest in obtaining convenient
and effective relief, at least when that interest is not adequately
protected by the plaintiffs power to choose the forum; the interstate
judicial system’s interest in obtaining the most efficient resolution of
controversies; and the shared interest of the several States in furthering

 

27 Worla'-Wide Volkswagen Corp. v. Wooa'son, 444 U.S. 286, 291 (1980) (quoting Int ’l Shoe
Co., 326 U.S. 310 at 316).

28 Id. at 292.
29 Ia’. (quoting Int’l Shoe Co., 326 U.S. at 316).
30 Ia'. (quoting Int’l Shoe Co., 326 U.S. at 317).

13

Christina Hea'ger, et al. v. Medline Industries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

fundamental substantive social policies.31

To the extent that foreseeability is involved in analysis of personal jurisdiction,
it is not “the mere likelihood that a product will find its way into the forum State.”32
Instead, “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.”33 Thus, a
corporation is subject to personal jurisdiction in a State where it “purposefully avails
itself of the privilege of conducting activities within the forum State.”34

Purposeful availment can be found in the products liability context where a
manufacturer or distributor intends to serve the forum State;

Hence if the sale of a product of a manufacturer or distributor . . . is not
simply an isolated occurrence, but arises from the efforts of the
manufacturer or distributor to serve directly or indirectly, the market for
its product in other States, it is not unreasonable to subject it to suit in
one of those States if its allegedly defective merchandise has been the
source of injury to its owner or to others.35

Stated differently, “[t]he forum State does not exceed its powers under the Due

Process Clause if it asserts personal jurisdiction over a corporation that delivers its

 

31 Ia'. (citations omitted) (first citing McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957);
then citing Kulko v. Superior Court, 436 U.S. 84, 92 (1978); then citing Shajj“er v. Heitner, 433 U.S.
186, 211 n.37 (1977); and then citing Kulko, 436 U.S. at 93).

32 Ia'. at 297.

33 Ia’. (citing Kalko, 436 U.S. at 97-98; Shajj’er, 433 U.S. at 216; ia'. at 217-19 (Stevens, J.,
concurring in judgment)).

34 Ia'. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
35 Ia'.

14

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

products into the stream of commerce with the expectation that they will be purchased
by consumers in the forum State.”36
Here, the exercise of general jurisdiction would not comport with due process,

and it is unclear whether stream-of-commerce jurisdiction would b.e supportable.
l . TheExercise of General Jurisdiction WouldBe Unconstitutional Here
The exercise of general jurisdiction over a foreign corporation solely on the
basis of “doing business,” without more, is constitutionally insufficient to the point
of being frivolous.37 A corporation is amenable to general jurisdiction in a place

”33 Paradigmatically, this

where “the corporation is fairly regarded as at home.
includes “the place of incorporation and principal place of business.”39 This is both
a matter of due process and international comity.40

Here, there has been no argument, nor is there any factual basis for finding, that
Allmed has its principal place of business in Delaware. And the Plaintiffs’
complaints expressly state that Allmed is a foreign corporation of China. Without
some claim that Allmed is essentially at home in Delaware, the threadbare allegation

that it is “doing business” here provides no constitutional basis to exercise general

 

36 Ia'. at 297-98 (citing Gray v. Am. Raa'ialor & Standara' Sanitary Corp., 176 N.E.2d 761
(lll. 1961)).

37 See Genuine Parts Co., 137 A.3d at 129-30 (“Until recently . . . . merely doing business
in a state was a basis for general jurisdiction there. But as we will later discuss . . . that is no longer

enough.”).
33 DaimlerAG v. Bauman, 134 S. Ct. 746, 760 (2014) (quoting Gooa'year, 564 U.S. at 924).
39 Id. (quoting Brilmayer, supra note 14, at 73 5)).
40 Id. at 762-63.

15

Christina Hedger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

jurisdiction over Allmed.
2. The Exercise of Stream-of-Commerce Jurisdiction May Be
Constitutional Here
lt is not clear whether there is a constitutional basis for stream-of-commerce
jurisdiction under these facts.
lnstructive for their factual similarity to this case, if not for the clarity of the
general rule Set out by the Court, are the United States Supreme Court’s plurality and
concurring opinions inJ. Mclntyre Machinery, Lta'. v. Nicastr0.41 an. Mclnlyre, the
Court determined that a state court could not exercise personal jurisdiction over a
foreign defendant where the only contacts between the defendant and the forum were
(l) an independent company’s agreement to sell the defendant’s products in the
United States, (2) attendance by some of the defendant’s employees, alongside
employees for the distributor, at annual conventions in various states outside the
forum, and (3) the sale of no more than four machines that ended up within the
forum.42 The justices were divided in their rationales for arriving at that conclusion.43
Justice Kennedy’s plurality opinion posited that “it is the defendant’s actions,
»44

not his expectations, that empower a State’s courts to subject him to judgment.

Personal jurisdiction is not a matter of fairness or foreseeability, the plurality noted,

 

41 564 U.S. 873.
42 Ia'. at 877~78 (Kennedy, J.) (plurality opinion).

43 Compare id. at 883_85 (Kennedy, J.) (plurality opinion) with id. at 887_90 (Breyer, J.,
concurring).

44 Ia'. at 883 (Kennedy, J.) (plurality opinion).

16

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

t45

but of purposeful availmen The plurality found two principles to be implicit in its

argument. “First, personal jurisdiction requires a forum-by-forum, or sovereign-by-

”46 That analysis must focus on “whether a defendant has

sovereign, analysis.
followed a course of conduct directed at the society or economy existing within the
jurisdiction of a given sovereign, so that the sovereign has the power to subject the
defendant to judgment concerning that conduct.”47 Secondly, the plurality continued,
“[b]ecause the United States is a distinct sovereign, a defendant may in principle be
subject to the jurisdiction of the courts of the United States but not of any particular
State.”48 The plurality believed the facts emphasized by the plaintiff “may reveal an
intent to serve the U.S. market, but they do not show that J. Mclntyre purposefully
availed itself of the New Jersey market.”49

Justice Breyer’s concurring opinion took a different tack.50 Justice Breyer
believed the outcome of the case was determined by precedent and did not require
resort to a “rule of broad applicability.”51 Justice Breyer based his reasoning on his
interpretation of the Court’s opinions in Asahi, where the Court “strongly suggested

that a single sale of a product in a State does not constitute an adequate basis for

 

45 Id.

46 Id. at 884.

47 Ia'.

48 Id.

49 Ia'. at 886.

5° Ia'. at 887 (Breyer, J., concurring).
51 Id.

17

Christina Hedger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

asserting jurisdiction over an out-of-state defendant, even if that defendant places his
goods in the stream of commerce, fully aware (and hoping) that such a sale will take

place.”52

Justice Breyer pointed out the three lenses through which the Asahi
opinions looked at stream of commerce, requiring either (1) “‘something more’ than
simply placing ‘a product into the stream of commerce,’ even if the defendant is
‘awar[e]’ that the stream ‘may or will sweep the product into the forum state,”’53 (2)
a sale that occurs as part of “‘the regular and anticipated flow’ of commerce into the

State,” and not as “only an ‘edd[y],”’54

or (3) a “regular course of dealing” as shown
by “‘the volume, the value, and the hazardous character’ of a good.”5 5 Justice Breyer
argued that viewed through any of those lenses, the defendant in J. Mclntyre did not
have a sufficient connection to the forum.56

Turning to the present case, there is no clear constitutional basis for stream-of-
commerce jurisdiction. ln order to establish such a constitutional basis, the Plaintiffs

must ultimately establish facts that would enable them to meet at least one of the tests

from J. Mclnlyre.

 

52 Ia'. at 888-89 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 111, 112
(1987)).

53 Ia'. at 889 (alteration in original) (quoting Asahi, 480 U.S. at 111_12 (O’Connor, J.)
(plurality opinion)).

54 Ia'. (quoting Asahi, 480 U.S. at 117 (Brennan, J., concurring in part and concurring in
judgment)).

55 Ia'. (quoting Asahi, 480 U.S. at 122 (Stevens., J., concurring in part and concurring in
judgment)).

56 Ia'.

18

Christina Hedger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

Using the test from the plurality opinion, there has not yet been a plausible
allegation of purposeful availment, or any Delaware-directed conduct by Allmed.
The Plaintiffs’ allegations did not mention any sales in Delaware, any marketing
directed at Delaware, or any other basis for specific jurisdiction And even taking
Allmed’s submissions into account, there was at most an intent to serve the broader
U.S. market, which is insufficient under the plurality’s test.

The Plaintiffs’ complaints fare no better under the tests remarked upon by
Justice Breyer. There is no allegation of “something more” than a single sale of the
product (and, indeed, there is no clear allegation that any product was ever sold
within Delaware to begin with). Neither is there so much as a bare allegation that
there was a “regular and anticipated” flow of Allmed products into Delaware, or a
“regular course of dealing” in the products, directed at Delaware. That Allmed is
alleged to do business in Delaware, without more, does not establish the
constitutionally required minimum contacts that the Plaintiffs have the burden of
establishing. Whether they can marshal additional facts in support of their theory will
determine the ultimate outcome of this dispute over jurisdiction

III. Jurisdictional Discovery is Necessary Here

The Plaintiffs could have more clearly articulated their theory of jurisdiction
and provided more detailed allegations in support of that theory. Having failed to do
so, however, will not bar them from jurisdictional discovery because Allmed’s
submissions have at least created a plausible argument that could support dual

jurisdiction The Plaintiffs are entitled to discovery to help in mounting proof for that

19

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl 4C-05-012 WLW
January 27, 2017

argument
Faced with a challenge to personal jurisdiction, plaintiffs are entitled to
discovery if their assertion of jurisdiction is minimally plausible:

While plaintiffs “may not ordinarily be precluded from reasonable

discovery in aid of” their attempt to prove that a defendant is subject to

the jurisdiction of the Court, plaintiffs are not entitled to jurisdictional

discovery where their assertion of personal jurisdiction “lacks[s] th[e]

minimal level of plausibility needed to permit discovery to go
forward.”57

Given the opportunity to respond to Allmed’s motions, the Plaintiffs asked for
discovery but did not make a serious attempt to lay out a plausible basis for personal
jurisdiction Instead, they sought to rest upon the allegations of the complaint,
pronouncing them a sufficient basis for general, specific, or dual jurisdiction That
pronouncement is not enough to entitle them to jurisdictional discovery as to all three
bases.

Instead, the Plaintiffs will be permitted limited jurisdictional discovery only as
to the existence of dual jurisdiction The parties are reminded that they may not go
on a “fishing expedition” in search of a jurisdictional hook.58

CONCLUSION

Allmed’s motions to dismiss the complaints against it for lack of personal

jurisdiction are DENIED WITHOUT PREJUDICE. The Plaintiffs’ request for

 

57 In re Asbestos Litig., No. 77C-ASB-2, 2016 WL 7404547, at *2 (Del. Super. Oct. 17,
2016) (Boyer, Special Master) (citing Hart, 593 A.2d at 539).

53 See Reid v. Siniscalchi, No. 2874-VCN, 2011 WL 378795, at *7 (Del. Ch. Jan. 31, 2011).

20

Christina Hea'ger, et al. v. Medline Ina'ustries, Inc., et al.
Civil Action No. Kl4C-05-012 WLW
January 27, 2017

limited discovery as to the dual-jurisdiction theory of personal jurisdiction is
GRANTED. Discovery will be limited to no more than ten interrogatories, ten
document requests, and twenty requests for admission, unless the parties otherwise
agree. Plaintiffs will bear the costs of any document translation The parties are to
agree to a limited discovery scheduling order within thirty days of the issuance of this
order. lf the parties are unable to agree on a scheduling order, the matter will be
resolved by the Court. The scheduling order will provide dates for the close of
jurisdictional discovery and for briefing on renewed motions to dismiss.

lT lS SO ORDERED.

/s/ William L. Witham Jr.
Resident Judge

 

WLW/dmh

21