Opinion
Cause No. IP02-0151-C-H/K
November 1, 2002
ENTRY ON DEFENDANTS' MOTIONS TO DISMISS
This diversity action presents claims for damages under state products liability law. Plaintiff Granville Tungate was injured when a tire he was repairing suddenly exploded. He and his wife Linda Tungate filed this suit against Bridgestone Corporation, alleging that the defective and negligent design and manufacture of the tire caused their injuries. The Tungates also named as defendants Bridgestone/Firestone North American Tire, LLC and Bridgestone/Firestone Truck Tire Division (collectively the "Firestone defendants"), subsidiaries of Bridgestone Corporation.
Defendant Bridgestone Corporation is a Japanese corporation and has moved to dismiss the claims against it for lack of personal jurisdiction. In addition, the Firestone defendants have moved to dismiss Count I of plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. As explained below, the court denies Bridgestone's motion to dismiss for lack of personal jurisdiction and also denies the Firestone defendants' motion to dismiss Count I.
I. Personal Jurisdiction
Neither side has asked for an evidentiary hearing on the facts relevant to personal jurisdiction. Accordingly, in ruling on Bridgestone's motion to dismiss for lack of personal jurisdiction, the court must accept plaintiffs' allegations as true unless controverted by Bridgestone's affidavits, and must resolve any conflicts in the parties' affidavits in plaintiffs' favor. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997), citing Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Cf. Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 676-77 (7th Cir. 2001) (distinguishing between Rule 12(b)(6) motions, which require district court to accept plaintiff's allegations, and motions to dismiss based on lack of personal jurisdiction or venue, which permit district court to hold an evidentiary hearing and resolve factual disputes before allowing a case to proceed); 2 Moore's Federal Practice § 12.31[5] at 12-45 (3d ed. 2000).
The Tungates, however, have requested a stay in order to conduct limited discovery if the court finds that a "prima facie showing" of jurisdictional facts has not been made. This proposed procedure has little to recommend it. It would require the court to offer an advisory opinion first, and then to relitigate the question. Applying this approach to contested issues would drag litigation out endlessly. Consider, for example, the prospect of a plaintiff announcing during a bench trial: "We rest, unless the court thinks we should lose, in which case we would like to call more witnesses," or a brief in opposition to summary judgment that asks for the opportunity to submit another brief and more evidence if the court is inclined to grant the motion. Accordingly, the court has decided the defense motions on the existing record.
A. Factual Context
By its own account, Bridgestone Corporation is the world's largest manufacturer of tires and other rubber products. Pl. Ex. C, D, E. Bridgestone and its subsidiaries operate 46 plants in 24 nations and market their products world-wide to 150 nations. Id.
Bridgestone is incorporated in Japan and maintains its principal place of business in Tokyo. Kita Aff. ¶ 4. Bridgestone is not licensed or registered to do business in Indiana, nor does Bridgestone maintain offices, post office boxes, telephone listings, bank accounts or real property in Indiana. Id. at ¶ 7.
Accordingly, Bridgestone has never incurred tax liability in Indiana.
Through its Firestone subsidiaries, however, Bridgestone "aggressively" targets what it describes as "the world's largest tire market" — American consumers. Pl. Ex. E at 4-6 (Bridgestone 2001 Annual Report). Bridgestone reports that 43 percent of its net sales originate from the Americas and that these sales comprise $6.9 billion of its net sales. Id. at 18. These sales efforts are led by the 2,200 company-owned Bridgestone/Firestone stores located in North America, by the thousands of independent retailers that sell its products, and by "stepped-up advertising and PR events" such as Indy Racing League (IRL) auto races. Id. at 6, 8.
Bridgestone itself does not sell Bridgestone-brand tires directly to American consumers. The tires are sold to American consumers either through distributors who buy the tires in Japan or by Bridgestone's Firestone subsidiaries, which manufacture the tires in their plants. Kita Aff. ¶ 9.
The tire at issue in this case is the Bridgestone V-Steel MIX tire.
Defendant Bridgestone designed the tire. A Firestone plant in Tennessee manufactured it. Id. at ¶ 11.
On or about January 26, 2000, Granville Tungate was attempting to repair the MIX tire at issue, in Greensburg, Indiana. The tire exploded, and as a result of the explosion, Mr. Tungate sustained injuries. Cplt. ¶ 8.
B. Legal Discussion
A federal district court exercising diversity jurisdiction has personal jurisdiction over a non-resident defendant "only if a court of the state in which it sits would have such jurisdiction." RAR, Inc., v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). In Indiana, personal jurisdiction depends on both whether requirements of the state-long arm statute and federal due process are satisfied. Anthem Ins. Cos. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1232 (Ind. 2000).
Prior to the Indiana Supreme Court's decision in Anthem, deciding personal jurisdiction in Indiana required consideration only of federal due process standards. Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir. 1990), is one of many cases in which the Seventh Circuit applied Indiana Trial Rule 4.4(A) to extend personal jurisdiction to the limits of federal due process, and so collapsed the application of the state rule and federal due process into a single inquiry. In Anthem, however, the Indiana Supreme Court reinvigorated Indiana Trial Rule 4.4(A) by requiring courts to determine separately and initially whether its provisions have been satisfied. 730 N.E.2d at 1232.
In federal court, the plaintiff bears the burden of proving personal jurisdiction when it is challenged by a motion under Rule 12(b)(2). RAR, Inc., 107 F.3d at 1276. In this action, plaintiffs have met this burden, satisfying the requirements of both the long arm statute and due process.
1. Indiana Trial Rule 4.4(A)
Indiana Trial Rule 4.4(A) serves as Indiana's long-arm statute and establishes two requirements for a court to exercise personal jurisdiction over a non-resident. First, the non-resident defendant's contacts with Indiana must fall within at least one of eight enumerated categories. Second, the suit must arise from one of these enumerated contacts. Ind. Tr. R. 4.4(A) (a non-resident "submits to the jurisdiction of the courts of this state as to any action arising from the following acts. . . ."); see Sohacki v. Amateur Hockey Ass'n of Illinois, 739 N.E.2d 185, 189 (Ind.App. 2000) (holding that trial court lacked jurisdiction under Indiana Trial Rule 4.4(A) because none of the allegedly wrongful acts "arose from any action performed by [defendant] in Indiana").
Personal jurisdiction under Indiana Trial Rule 4.4(A) may be either general or specific. Alpha Tau Omega Fraternity v. Pure Country, Inc., 185 F. Supp.2d 951, 956 (S.D.Ind. 2002); see also Anthem, 730 N.E.2d at 1240 (finding one defendant's business contacts sufficient to establish general jurisdiction).
General jurisdiction makes a non-resident defendant amenable to suit within a particular forum regardless of the subject matter of the suit, and general jurisdiction must be based on the defendant's continuous and systematic contacts with the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984). Specific jurisdiction, however, makes a non-resident defendant amenable only to suits arising out of or related to its contacts with the particular forum. Id. at 414. Specific jurisdiction may be based on relatively modest contacts with the forum if they have a substantial connection to the plaintiff's action. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76 (1985); RAR, Inc., 107 F.3d at 1277; Anthem, 730 N.E.2d at 1235.
The parties' submissions show that Bridgestone had purposeful contacts with Indiana sufficient to support at least specific jurisdiction in this case, which has arisen from those contacts. Jurisdiction over Bridgestone is proper under Indiana Trial Rule 4.4(A) because Bridgestone designed the tire in question and derives substantial revenue from the distribution of such tires in Indiana. In many cases, including many product liability cases, Trial Rule 4.4(A)(3) confers jurisdiction over persons who cause injuries within Indiana without being present. With relevant emphasis added, Indiana Trial Rule 4.4(A)(3) provides:
(A) Acts Serving as a Basis for Jurisdiction. Any person or organization that is a nonresident of this state, a resident of this state who has left the state, or a person whose residence is unknown, submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or his agent:
. . . .
(3) causing personal injury or property damage in this state by an occurrence, act or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefits from goods, materials, or services used, consumed, or rendered in this state.
Jurisdiction over a non-resident defendant is thus proper when (a) the plaintiff suffered injury in Indiana; (b) as a result of the defendant's act or omission outside Indiana; and (c) the defendant derived substantial revenue or benefits from goods used or consumed in Indiana. The Tungates have met these three requirements.
For purposes of the motion to dismiss, the Tungates satisfy the first element because they allege they were injured when a Bridgestone V-Steel MIX tire exploded in Greensburg, Indiana on January 24, 2000. The Tungates also satisfy the second element, for they claim that the defective or negligent design of the MIX tire caused their injuries, and Mr. Kita has testified that Bridgestone itself designed the tire.
The factual submissions also provide evidence of the third element: that Bridgestone derived substantial revenue and/or benefits from tires sold to American consumers, including those in Indiana. First, Bridgestone benefitted from the sale of the Bridgestone V-Steel MIX tire. Bridgestone designed the tire for Firestone, which Firestone then manufactured and sold. For its work in designing the tire, Bridgestone undoubtedly received substantial financial compensation. Moreover, in its 2001 annual report, Bridgestone reported that 43 percent of its net sales (including those by subsidiaries for whom Bridgestone designs tires) originate from the Americas and that these sales accounted for over $6 billion of its net sales. Pl. Ex. E at 18. The court can reasonably infer that a substantial volume of sales occurred in Indiana.
Bridgestone also has a special relationship with the State of Indiana. Part of Bridgestone's marketing campaign depends upon the advertising and name recognition that it receives from its association with motor sports, including several high-profile events in Indiana. Bridgestone stated in its 2001 annual report that its American subsidiaries aggressively promote "our main tire brands" through "PR events." Pl. Ex. E at 8. Bridgestone frequently refers to IRL racing, the Indianapolis 500, and Formula 1 racing in its annual report, explaining for example:
Bridgestone- and Firestone-brand tires are dominant at the summit of American motorsports in Indy Racing League (IRL) and Championship Auto Racing Teams (CART) competition. That dominance reminds customers of our technological edge, which carries over into tires for ordinary driving on streets and highways.
Id. See also id. at 12 (Bridgestone supplies tires for Ferrari Formula 1 team, whose drivers placed first and second in 2002 United States Grand Prix in Indianapolis).
Because Bridgestone designed the tire that allegedly injured the Tungates and derives substantial revenues from tire sales to Indiana residents, plaintiffs have satisfied the third element of Trial Rule 4.4(A)(3).
2. Due Process
The requirements of federal due process are also satisfied. Due process requires that a non-resident defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940). In the case of specific jurisdiction, due process requires that a non-resident defendant have established its contacts with the forum state by purposefully availing itself of the privilege of conducting business there. Logan Productions, Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996). "This `purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985), quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984). In other words, the defendant's conduct and connection with the forum state should be such that it should reasonably anticipate being haled into court there. Burger King, 471 U.S. at 474. This nexus is significant because it provides "a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." Hyatt Intern. Corp. v. Coco, 302 F.3d 707, 716 (7th Cir. 2002), quoting World-Wide Volkswagen, 444 U.S. 286, 297 (1980).
Bridgestone contends that the exercise of personal jurisdiction would violate due process because the contacts its Firestone subsidiaries had with Indiana cannot be imputed to it as the parent company. Bridgestone correctly asserts that "personal jurisdiction cannot be premised on corporate affiliation or stock ownership alone where corporate formalities are substantially observed and the parent does not exercise an unusually high degree of control over the subsidiary." Central States v. Reimer Express World Corp., 230 F.3d 934, 943 (7th Cir. 2000). In this case, however, the exercise of personal jurisdiction comports with due process because of Bridgestone's own contacts with Indiana.
The parties' submissions provide evidence that Bridgestone's contacts with Indiana were purposeful rather than random or fortuitous. Those contacts gave Bridgestone fair warning that it could be subject to suit in Indiana on disputes arising from those contacts.
First, Bridgestone designed the MIX tire at issue in this case. It designed the tire for widespread distribution. Bridgestone foresaw and intended that the model of tire would be distributed across the United States to American consumers, including those in Indiana, for the benefit of Bridgestone. That intended activity is sufficient to support jurisdiction in Indiana.
Second, if more were needed, Bridgestone's marketing strategy purposefully targets American consumers through its subsidiaries and through motor sport competitions specifically occurring in Indiana. Bridgestone's 2001 annual report discusses its marketing strategies concerning the Americas. The report also contains numerous pictures highlighting the success of Bridgestone at IRL competitions and how it uses this success to market its products. The fact that Bridgestone may target these consumers indirectly through subsidiaries is irrelevant to this analysis because the end result is same: Bridgestone is being sued in Indiana based on its own activities and its intent to profit from sales to American and Indiana consumers.
As discussed above, in its 2001 annual report Bridgestone stated that $6.9 billion of its net sales originated from sales in the Americas.
Based on its design of the MIX tire, the intended distribution of its products to Indiana consumers, its marketing strategy that targets Indiana consumers, and the substantial revenue Bridgestone seeks to derive from Indiana, Bridgestone could anticipate being sued in Indiana for claims arising from its contacts here.
Finally, under Asahi Metal Industry Co. v. Superior Court, the court must consider whether the exercise of personal jurisdiction is reasonable. Mid-America Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353, 1362 (7th Cir. 1996) (finding that exercise of personal jurisdiction over foreign contractor was reasonable where plaintiff had significant interest in litigation and state had substantial interest in protecting its residents from hazardous products), citing Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 109 (1987). As Asahi Metal makes clear, the burden imposed on a foreign defendant in having to litigate in a foreign judicial system is given significant weight in the reasonableness determination. Mid-American Tablewares, 100 F.3d at 1362.
The weight accorded to a foreign defendant's burden must be balanced, however, against the interests of the plaintiff and the forum state. As the Supreme Court also noted in Asahi Metal, "often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant" when minimum contacts have been established. 480 U.S. at 114.
Bridgestone has not come forth with evidence demonstrating such a severe burden that forcing it to litigate in this judicial district would violate traditional concepts of fair play and substantial justice. See Burger King, 471 U.S. at 477; Logan Productions Inc. v. Optibase Inc., 103 F.3d 49, 53 (7th Cir. 1996) (once court finds sufficient minimum contacts, a defendant escapes jurisdiction only by making compelling case that forcing it to litigate in forum state would violate traditional principles of fair play and substantial justice). Indeed, Bridgestone only analogizes its situation to that of the defendant in the Asahi Metal case, arguing that defense of this suit will place an unreasonable and severe burden upon it. Bridgestone also contends that plaintiffs have not alleged facts relating to the design or manufacture of the MIX tire that would give Indiana more than a general interest in the litigation. These arguments are not persuasive.
First, this case is distinguishable from Asahi Metal, where the defendant's only knowledge that its product could enter California came from the fact that it placed its product into the stream of commerce. In this case, Bridgestone knew that its products would enter Indiana and employed a marketing and distribution strategy to ensure that they did. Moreover, Bridgestone specifically targeted consumers across the United States and used its contacts with the Indianapolis 500 and other events in Indiana to market its products to consumers. See Pl. Ex. E at 8 (Bridgestone's 2001 annual report with photographs of its retail outlets depicting Bridgestone- and Firestone-brand success at the Indianapolis 500).
Second, both the plaintiffs and the State of Indiana have a significant interest in this litigation. Assuming the validity of their claims, the Tungates' interest in obtaining a convenient and effective relief is substantial. Indiana also has a significant interest in providing relief to its citizens who have been injured by allegedly defective and dangerous products, especially those that are sold and distributed here. Compare Mid-America Tablewares, Inc., 100 F.3d at 1362 (a state has a compelling interest in regulating the conduct of manufacturers that expose its residents to defective products) with Asahi, 480 U.S. at 114 (finding both plaintiff's and California's interest in litigation minimal where remaining claim against foreign defendant corporation was asserted by Taiwanese plaintiff).
In light of the substantial connection between defendant's purposeful contacts with this forum and plaintiffs' damage claims, the Tungates have demonstrated that the exercise of personal jurisdiction over Bridgestone is proper in this judicial district.
II. Firestone's Motion to Dismiss
The Firestone defendants have filed a motion to dismiss Count I of the Tungates' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failing to state a claim upon which relief can be granted. Plaintiffs' complaint consists of two counts, the first alleging common law negligence and the second alleging strict liability under the Indiana Product Liability Act ("IPLA"). Firestone contends that Count I and Count II are "duplicitous" because the IPLA governs all actions regardless of the legal theories under which such actions are brought.
See Ind. Code § 34-20-1-1. Because Count I and Count II are "duplicitous," Firestone argues, Count I must be dismissed.
The relationships between the common law and Indiana product liability statutes have challenged courts and attorneys for years. The court believes that this issue can be addressed more precisely at a later stage of this case, if it is necessary at all, when arguable similarities and differences can be spelled out in more detail rather than at the more abstract level of the pleadings. Accordingly, the court denies Firestone's motion to dismiss Count I.
Conclusion
For the reasons stated above, Bridgestone's motion to dismiss the claims against it for lack of personal jurisdiction is denied, and the Firestone defendants' motion to dismiss Count I is also denied.
So ordered.