Opinion
24108.
Decided March 4, 2004.
Edward Sivin, Esq., New York, NY, for Plaintiff's Attorney.
Swidler Berlin Shereff, Friedman, A. Rowland, R. Topp, Esq., Attys for Def. NY.
Jason, R. Scherr, Esq., Washington, D.C., 20007, admitted pro hac vice, Beth L. Rogoff, Esq., Kardisch, Link Assoc. PC, Attys, for Def. Bock Water Htr., Rockville Centre, NY, for Defendant's Attorney.
The case at bar raises the often visited and sometimes problematic issue of the parameters of New York's long-arm jurisdiction.
The defendants Bock Water Heaters, Inc. (hereinafter "Bock"), and the Perfection Corporation (hereinafter "Perfection") have moved for an Order pursuant to CPLR § 3211(c)(8) dismissing the Complaint and any Cross-Claims against them for lack of personal jurisdiction. The defendant Bock additionally moves for dismissal pursuant to CPLR § 3211(a)(5) and (7) on the grounds that a cause of action has not been stated, and that plaintiff's contractually based claims are barred by the Statute of Limitations.
Plaintiff sued defendant Bock, a Wisconsin corporation, and defendant Perfection, a Delaware corporation, alleging that as a result of his ingestion of plastic particles found in his home's water supply he experienced repeated and severe bouts of diverticulitis eventually requiring surgery. Plaintiff maintains that the plastic particles which contaminated his drinking supply came from his home's Bock Water Heater and were the result of the premature disintegration of a "dip tube" which is a component part located inside the Bock water heater. The dip tube was supplied to Bock by Perfection.
Perfection is a Delaware corporation and manufactures component parts to the specifications of industrial customers. Its principal place of business is in Madison, Ohio. The company has no property, offices, plants or other facilities in this State. One of the component parts that Perfection manufactures for certain customers is a cold water inlet tube commonly known as a "dip tube". Dip tubes are used in residential and commercial hot water heaters to bring cold water into the heating element. Perfection supplies dip tubes to water heater manufacturers including Bock. Bock is a Wisconsin corporation with its principal place of business and manufacturing facilities in Madison, Wisconsin. Like Perfection, Bock has no property, offices, plants or other facilities in this State.
New York's long-arm statute which is found in CPLR § 302(a) provides in pertinent part:
". . . a court may exercise personal jurisdiction over any non-domiciliary who . . .
3. Commits a tortious act without the state causing injury to person or property within the state . . . if he . . .
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce (CPLR 302[a][3][ii])."
It is undisputed that the alleged tortious acts occurred outside the State and the injury to the plaintiff occurred within the State. Moreover, no one disputes that both defendants Bock and Perfection derive substantial revenue from interstate commerce. The question is whether either of these defendants could reasonably have expected that its conduct would "have consequences in this State" which presents the salient issue in this case.
Although Bock is a Wisconsin corporation, it markets and sells its water heaters to all 50 States, including New York. Bock's website presents its visitors with a map of all 50 States and enables them to click on any State, including New York, to purchase a Bock water heater in that State.
On the other hand, it appears that Bock does not sell or ship its water heaters directly to New York, but rather utilizes independent sales representatives. The sales representative for the area which includes New York is Altherm, a New Jersey based entity, which is neither owned, controlled or managed by Bock. Bock focuses on this fact as a principal argument for evading jurisdiction in our State.
This court finds, however, that CPLR 302(a)(3)(ii) was satisfied in this case as to defendant Bock, notwithstanding its utilization of an out-of-state distributor. Clearly, Bock, a national leading manufacturer selling its products in all 50 States, expected or should have expected that a defect in its product would have consequences in New York. Indeed, neither of the Bock representatives who submitted affidavits on this motion denied that the company expected, let alone knew, that a defect in its product would have New York consequences. The utilization of an out-of-state distributor does not change this fact, and, accordingly, this court has no difficulty in finding Bock within the reach of New York's long-arm statute. The question now turns to whether Bock's actions satisfy the Federal due process prerequisites for a State's assertion of personal jurisdiction. Due process requires that a defendant have "minimum contacts" with the foreign State so that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice" (see, International Shoe Co. v. Washington, 326 U.S. 310, 316). The Supreme Court has explicitly declared that "The foreseeability that is critical to due process analysis is not the mere likelihood that the product will find its way into the foreign State. Rather it is that the defendant's conduct in connection with the foreign State are such that he should reasonably anticipate being haled into court there." (See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297). The foreseeability requirement is itself restricted by the purposeful affiliation requirement (see, Darienzo v. Wise Shoe Stores, 74 A.D.2d 342, 346). There must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the foreign state, thus invoking the benefits and protection of its laws" (see, Hanson v. Denckla, 357 U.S. 235, 253).
The most recent pronouncement from our Court of Appeals addressing long-arm jurisdictional issues is found in La Marca v. Pak Mor Manufacturing Co. ( 95 N.Y.2d 210). In La Marca, the Court of Appeals upheld jurisdiction over a Texas manufacturer which was engaged in interstate commerce because the defendant corporation "itself forged ties with New York", and "took purposeful action, motivated by an entirely understandable wish to sell its products here" ( La Marca, at page 217). In the case at bar, the same can be said with regard to Bock. Bock ran a website specifically soliciting a New York audience and then directed sales inquiries to its distributor Altherm. While the Court of Appeals in La Marca did note that the defendant in that case had a New York based distributor and district represent-ative, this court does not believe that that one factor was dispositive of the court's holding. Quoting the United States Supreme Court decision in World-Wide Volkswagen, supra, La Marca held:
"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 there been the source of injury to its owner or to others" ( La Marca v. Pac Mor Manufacturing Co., 95 N.Y.2d, at 217, supra [quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S., at 297, supra).
Critical within that passage is the terminology "to serve directly or indirectly" the foreign market. In the case at bar, while Bock chose to utilize a distributor based out of State, the record clearly supports the inference that Bock through the use of its internet site in conjunction with its distributor was knowingly and purposefully attempting to reach a New York market, albeit indirectly (see, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 297; Hanson v. Denckla, 357 U.S. 235, 253; see also, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475). Unlike World-Wide Volkswagen Corp., supra where the plaintiff customer chose to drive to the foreign State ( 44 U.S., at 288, 295) or in Kulko v. Superior C.T. of Cal. ( 436 U.S., at 86-87) where, in a child-support case, the plaintiff former spouse chose to settle in the former State, contact with New York was certainly not happenstance, but rather planned and self-initiated. Moreover, Bock is not a foreign based entity (cf., Asani Metal Ind. Co. v. Superior Ct. Of Cal., 480 U.S. 102), but rather like the defendant in La Marca, supra, is a United States corporation fully familiar with this country's legal system. In fact, Bock even holds a membership in a New York based industry association, the Oil Heat Institute of Eastern New York. Under the circumstances of this case, the maintenance of this action in New York does not offend "traditional notions of fair play and substantial justice" as, indeed, an opposite result would, in fact, do so. (See, Burger King Corp. v. Rudzewicz, supra at 476; see also, International Shoe Co. v. State of Washington, 326 U.S. at 320).
The jurisdictional issues with regard to Perfection, however, are far more problematic. Perfection is an out-of-State corporation that supplies component parts to an out-of-state manufacturer. Thus, Perfection is two steps removed from the introduction of the complete product into the New York market. Moreover, unlike Bock there is no evidence that Perfection directly solicited sales for its dip tube product on its internet website. Perfection, by its own admission, sold over 24 million dip tubes to 90% of the U.S. water heater manufacturers, and plaintiff points to Perfection's boast contained on its website that "If you purchase a water heater in the United States or Canada it will probably contain Perfection components". Foreseeability, however, that a product might or even probably will land in a foreign State is insufficient, in and of itself, under a due process analysis to confer personal jurisdiction. "The foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the foreign state" (see World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297; see also, Asahi Metal Ind. v. Superior Court of California, Solano County, 480 U.S. 102). Due process requires a showing that the defendant also have some "purposeful affiliation" with the foreign state (see, Martinez v. American Standard, 91 A.D.2d 652). The record before the court does not support such a finding at this time. Perfection admits, however, that it sells and ships unrelated goods into New York and, as is evident from its website, Perfection markets its products nationwide. The nature and extent of these sales and shipments are unknown at this time, and may support jurisdiction.
Certainly, plaintiff has submitted sufficient facts that Perfection engaged in activities which made it at least foreseeable that its products would be marketed and found in New York, thereby possibly subjecting it to personal jurisdiction (see, Napolitano v. Mastic Bicycles and Fitness Co., Inc., 279 A.D.2d 461; Drexler v. High Lift, Inc., 296 A.D.2d 434; Crair v. Saxena, 277 A.D.2d 275). Where, as here, a defendant moves to dismiss on jurisdictional grounds before discovery is complete, the Court of Appeals has held that "the opposing party need only demonstrate that facts 'may exist' whereby to defeat the motion. It need not be demonstrated that they do exist. This obviously must await discovery" (see, Peterson v. Spartan Industries, Inc., 33 N.Y.2d 463). A prima facie showing of jurisdiction is not even required, particularly for one seeking to confer jurisdiction under the long-arm statute (see, Peterson, supra at 467). All that is required is that the opposing party "made a sufficient start . . ." (id. at 467); see also, Cordero v. City of New York, 236 A.D.2d 577; Cosmos Mason Supply, Inc. v. Lido Beach Assocs., Inc., 95 A.D.2d 818). Accordingly, the Court finds that plaintiff is entitled to discovery on the issue of personal jurisdiction with leave to Perfection to renew its motion to dismiss upon completion of discovery (see, Napolitano, supra at 462; see also, Amigo Foods Corp. v. Marine Midland Bank-New York, et. al, 39 N.Y.2d 391). As noted in La Marca, supra, New York has an interest in providing a convenient forum for a New York resident who was allegedly injured in New York, and it would be more orderly to allow plaintiff to sue all named defendants in a single action which would promote "the interstate judicial system's shared interests in obtaining the most efficient resolution of the controversy" ( La Marca, supra at 219).
Defendant Bock's Motion to Dismiss pursuant to CPLR § 3211(a)(5) on the ground that a cause of action has not been stated is denied, as the movants have failed to set forth prima facie entitlement to a dismissal on the substantive merits of the case (see, Davis v. C.C.F. Corp., 277 A.D.2d 342). Defendant Bock's Motion pursuant to CPLR 3211(a)(7) to dismiss the plaintiff's contractually based claims as barred by the Statute of Limitations is granted unopposed.
This shall constitute the decision and Order of the Court.