Court Opinion

ID: 9465166
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:37:54.45679+00
Date Added: 2024-06-11T17:39:00.797504
License: Public Domain

STEPHENSON, Circuit Judge,
with whom LAY and HEANEY, Circuit Judges, join, dissenting.
The dispositive issue in this case is whether Acciaierie Weissenfels (AW) is insulated from in personam jurisdiction under the due process clause of the Fourteenth Amendment in a product liability case because it used an intermediary in the sale and distribution of an alleged faulty chain causing plaintiffs’ injuries. AW purchased the chain in question from an unknown Yugo*838slavian firm and then packaged and sold it as its own product1 to Frank Fehr & Co., a British corporation with the exclusive right to sell AW’s products in North America. Frank Fehr & Co. resold the chain to its American subsidiary, Fehr Brothers, Inc.
The district court in its memorandum opinion denying AW’s motion to dismiss noted that AW relied on language in Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), which was cited with approval in Shaffer v. Heitner, 433 U.S. 186, 216, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), to the effect that a defendant must have “purposely avail[ed] itself of the privilege of conducting activities within the forum State” to subject itself to personal jurisdiction. The district court then stated:
We hold that on the alleged facts of this case, the phrase “purposefully avails itself of the privilege of conducting activities” includes the actions of AW. We reach this result because AW’s product which it allegedly packaged and warranted as its own is the subject matter of this litigation. In delivering the chain to Frank Fehr and Company, AW must have anticipated that the chain would be distributed in all fifty states of the United States and it must have foreseen that its product would be sold within Arkansas.
AW was not the entity which consummated the sale within Arkansas. If this fact were decisive and if a foreseeability test for “purposely avails itself” were' not applied in products liability cases, an injured person would almost always be left with no direct recourse against the manufacturer of the product causing his injury-
The courts have recognized that direct contact with the forum state is not essential to the exercise of personal jurisdiction. So long as a manufacturer or distributor can reasonably anticipate that its products will be sold and' distributed in a given state and through their use injury occur, it can be held to account through in personam jurisdiction. In Honeywell, Inc. v. Metz Appa-ratewerke, 509 F.2d 1137, 1144 (7th Cir. 1975), the court of appeals made it abundantly clear that a court must look to the economic realities of the case.
To the extent that a corporate defendant avails itself of the privilege of conducting activities in a state, it enjoys the benefits and protection of the laws of that state, International Shoe, supra, 326 U.S. at 319, 66 S.Ct. 154, and we believe that Metz has done so by injecting its products into the Illinois marketplace. Metz urges that its activity does not fit this mold simply because its products are sold to EPOI “f. o. b. German seaport or German border,” Appellee’s Brief at 11, but that position is not, of course, a realistic evaluation of the nature and quality of Metz’s business affairs, viewed in light of the arrangement with EPOI.
Direct contact with the forum state is not essential to the exercise of personal jurisdiction. Metz may not have physically entered the state of Illinois, but it placed its flash devices in the stream of commerce under such circumstances that it should reasonably have anticipated that injury through infringement would occur there. [Citations omitted.] We look to the economic and commercial realities of this case, and in our view, it is not within *839the contemplation of the concepts of fairness and due process to allow a wrongdoing manufacturer to insulate himself from the long arm of the courts by using an intermediary or by professing ignorance of the ultimate destination of his products.
It would be fundamentally unfair to allow a foreign manufacturer to insulate itself from the jurisdiction of the court through the use of an exclusive distributor. Hetrick v. American Honda Motor Co., 429 F.Supp. 116, 118-19 (D.Neb.1976).
It is not essential to personal jurisdiction that AW knew that its product was being sold in Arkansas. It is enough that AW could reasonably anticipate that its product sold through an exclusive distributorship in North America might ultimately be used in any state of the United States and it would be held to answer in any such state for the damage the product caused. The manufacturer cannot deny the substantial interest of the injured person’s state in providing a convenient forum for its citizens.
A corporation is answerable where it introduces its product into the stream of interstate commerce if it has reason to know or expect that its product would be brought into the state where the injury occurred. Eyerly Aircraft Co. v. Killian, 414 F.2d 591, 595-96 (5th Cir. 1969). Accord, Coulter v. Sears, Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970); Williams v. Vick Chemical Co., 279 F.Supp. 833, 837 (S.D.Iowa 1967). Where the activities complained of create a substantial risk of injury in the forum state, direct contact with that state is not essential. Jones Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136, 1140 (9th Cir. 1971); Duple Motor Bodies, Ltd. v. Hol-lingsworth, 417 F.2d 231, 235 (9th Cir. 1969).
The Supreme Court recognized that a single transaction is a sufficient contact for purposes of due process if it gives rise to the liability asserted in the suit. McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). The Court noted the trend “toward expanding the permissible scope of state jurisdiction over foreign corporations and other nonresidents” is in part attributable to the transformation of our national economy over the years. Id. at 222, 78 S.Ct. at 201.
Today many commercial transactions touch two or more States and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.
Id. at 222-23, 78 S.Ct. at 201. Compare Kulko v. Superior Court of California, 436 U.S. 84, 96, 100-101, 98 S.Ct. 1690, 1699, 1701-02, 56 L.Ed.2d 132 (1978), where the Supreme Court noted that the transaction giving rise to the claim for personal jurisdiction was not a commercial transaction involving an economic benefit to the party that would make fair the assertion of the state’s judicial jurisdiction.
A state has a legitimate interest in providing a meaningful forum for its citizens who have suffered damages as a result of faulty products being shipped into the state by foreign corporations. In Hardy v. Pioneer Parachute Co., 531 F.2d 193, 195 (4th Cir. 1976), the court stated:
Modern transportation, communication, and the national flow of commerce have contributed to the recognition that states have a legitimate interest in providing means for their citizens to seek redress against foreign corporations that ship allegedly defective products into the state. No unconstitutional burden is imposed on a foreign corporation by requiring it to defend a suit in a forum located in a state where it has advertised and sold a product whose use gave rise to the cause of action.
We recognize that the inconvenience resulting to a foreign defendant in defending itself should not be ignored but where the defendant benefits from economic activity within the forum state and the cause of action arises out of such activity it is not *840unfair to hold the defendant accountable in the courts of the forum. Honeywell, Inc. v. Metz Apparatewerke, supra, 509 F.2d at 1145; Hetrick v. American Honda Motor Co., supra, 429 F.Supp. at 119.
In summary, we are satisfied that AW has purposefully availed itself of the privilege of conducting activities within the forum state as required by Hanson v. Denck-la, supra, 357 U.S. at 253, 78 S.Ct. 1228. It is enough, as demonstrated by the record, that AW had reason to know that its products, traveling through an exclusive distributorship, could be sold in any state of the United States. Under the circumstances, we do not believe it is unreasonable to require Acciaierie Weissenfels to defend this product liability action in Arkansas. It is fundamentally unfair to allow a foreign manufacturer to insulate itself from the jurisdiction of the courts by use of an exclusive distributorship.

. It was so alleged by plaintiffs and assumed to be true under the motion to dismiss. See majority opinion, supra, at 835. We also note that Fehr Brothers, Inc. in response to an interrogatory admitted that periodically since 1972 it had distributed to Arkansas customers advertising brochures showing AW products. A sample first page thereof is attached to its brief and reads as follows:
ACCIAIERIE WEISSENFELS has been producing chains for over 500 years and is a pioneer in the technological development of chain. Our factory is equipped with the most modern chain welding and heat treating equipment available and staffed by highly skilled workmen to whom chain making is a family tradition.
We welcome your inquiries for High Test and Special Alloy Steel Chains.
Exclusive Agents for U.S.A.
FEHR BROS. MANUFACTURES, Inc. 110, Wall Street
NEW YORK, N. Y. - 10005
FAIRLINE [trademark]