No. 06IN THE
Supreme Court of the United States
TOKAI CORPORATION,
Petitioner,
v.
HELEN M. SAIA, et al.,
Respondents.
_______________________________
ON PETITION FOR A WRIT OF CERTIORARI TO THE
ILLINOIS APPELLATE COURT
PETITION FOR A WRIT OF CERTIORARI
MELISSA A. MURPHY-PETROS
Counsel of Record
DOMINICK W. SAVAIANO
MELINDA S. KOLLROSS
TORRENCE E. LEWIS
CLAUSEN MILLER P.C.
Attorneys for Petitioner
10 South LaSalle Street
Suite 1600
Chicago, Illinois 60603
(312) 855-1010
205863
A
((800) 274-3321 • (800) 359-6859
i
QUESTION PRESENTED
The question presented in this product liability action is
whether petitioner, a Japanese product designer, is subject to
personal jurisdiction in Illinois on the basis of Justice Brennan’s
“stream of commerce” theory where it is undisputed that:
•
petitioner has no minimum contacts with Illinois;
•
petitioner sold its design to its U.S. subsidiary;
•
petitioner plays no role in the operation of the subsidiary,
which is incorporated in Delaware and has its principal
place of business in California;
•
the product was manufactured in Mexico by a Mexican
corporation without petitioner’s knowledge or
involvement; and
•
without petitioner’s knowledge or involvement, the
subsidiary distributed the product into the national
stream of commerce from which it ended up in Illinois.
ii
PARTIES TO THE PROCEEDING AND
STATEMENT PURSUANT TO RULE 29.6
The petitioner is Tokai Corporation, a Japanese corporation
with its principal place of business in Tokyo. The respondents
are Helen M. Saia, individually and as special administrator of
the estate of Alexis K. Saia, a deceased minor, an Illinois resident
(“respondent”); Scripto-Tokai Corporation, a Delaware
corporation with its principal place of business in Rancho
Cucamonga, California; Kmart Corporation, a Michigan
corporation; and Partnership Concepts Realty Management, Inc.,
an Illinois corporation.
Petitioner, Tokai Corporation, has no parent corporation
and no publicly held company owns 10% or more of its stock.
iii
TABLE
CONTENTS
CitedOF
Authorities
Page
Question Presented . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Parties to the Proceeding and Statement Pursuant to
Rule 29.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
Table of Cited Authorities . . . . . . . . . . . . . . . . . . . .
v
Table of Appendices . . . . . . . . . . . . . . . . . . . . . . . . .
xi
Opinions Below . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Constitutional and Statutory Provisions Involved . . . .
2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Statement of the Case . . . . . . . . . . . . . . . . . . . . . . . .
4
Reasons for Granting the Petition . . . . . . . . . . . . . .
13
I.
The Federal Circuits And The State Supreme
Courts Are Deeply Split In Their Application Of
The Stream Of Commerce Theory. Review By
This Court Is Necessary To Establish A Uniform
National Standard Upon Which Defendants In
Product Liability Suits May Rely When
Minimum Contacts With The Forum State Are
Sought To Be Established Through The Stream
Of Commerce Theory. . . . . . . . . . . . . . . . . . .
13
iv
Cited
Authorities
Contents
Page
II.
This Conflict Creates Significant Problems For
All Parties To A Product Liability Action. . . . .
25
III. The “Stream Of Commerce Plus” Test Is The
Most Consistent With Federalism And Due
Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
v
Cited
Authorities
TABLE OF
CITED
AUTHORITIES
Page
Cases
A. Uberti and C. v. Leonardo, 892 P.2d 1354 (Ariz.
1995), cert. denied, 516 U.S. 906 (1995) . . . . . . .
21
Anderson v. Metropolitan Life Ins. Co., 694 A.2d 701
(R.I. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Arguello v. Industrial Woodworking Machine Co., 838
P.2d 1120 (Utah 1992) . . . . . . . . . . . . . . . . . . . . .
21
Asahi Metal Industry Co., Ltd. v. Superior Court of
California, 480 U.S. 102 (1987) . . . . . . . . . . . . passim
Beaudoin v. South Texas Blood & Tissue Center, 699
N.W.2d 421 (N.D. 2005) . . . . . . . . . . . . . . . . . . .
21
Bedrejo v. Triple E Canada, Ltd., 984 P.2d 739 (Mont.
1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Barone v. Rich Bros. Interstate Display Fireworks Co.,
25 F.3d 610 (8th Cir. 1994), cert. denied, 513 U.S.
948 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Boit v. Gar-Tec Products, Inc., 967 F.2d 671 (1st Cir.
1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Bridgport Music, Inc. v. Still N The Water Publishing,
327 F.3d 472 (6th Cir. 2003), cert. denied, 540 U.S.
948 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 22
Clune v. Alimak AB, 233 F.3d 538 (8th Cir. 2000),
cert. denied, 533 U.S. 929 (2001) . . . . . . . . . . . .
20
vi
Cited Authorities
Page
CMMC v. Salinas, 929 S.W.2d 435 (Tex. 1996) . . .
22
Compuserve, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.
1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Connelly v. Uniroyal, Inc., 389 N.E.2d 155 (Ill. 1980),
cert. denied, 444 U.S. 1060 (1980) . . . . . . . . . . . 19, 20
Conway v. Royalite Plastics, Ltd., 12 S.W.3d 314 (Mo.
2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Dehmlow v. Austin Fireworks, 963 F.2d 941 (7th Cir.
1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 21
Ex Parte Lagrone, 839 So.2d 620 (Ala. 2002) . . . . .
21
Fortis Corporate Ins. v. Viken Ship Management, 450
F.3d 214 (6th Cir. 2006) . . . . . . . . . . . . . . . . . . . .
18
Frankenfeld v. Crompton Corp., 697 N.W.2d 378
(S.D. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Grange Ins. Association v. State, 757 P.2d 933 (Wash.
1988), cert. denied, 490 U.S. 1004 (1989) . . . . . .
21
Gray v. American Radiator & Standard Sanitary
Corp., 176 N.E.2d 761 (1961) . . . . . . . . . . . . . . . 11, 20
Griffis v. Luban, 646 N.W.2d 527 (Minn. 2002), cert.
denied, 538 U.S. 906 (2003) . . . . . . . . . . . . . . . .
27
Hapner v. Solis Apparatus v. Manufactories, Ltd., 411
N.W.2d 439 (Mich. 1987) . . . . . . . . . . . . . . . . . . .
18
vii
Cited Authorities
Page
Hill v. Showa Denko, K.K., 425 S.E.2d 609 (W. Va.
1992), cert. denied, 508 U.S. 908 (1993) . . . . . . .
21
Holder v. Haarmann & Reimer Corp., 779 A.2d 264
(D.C. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Jennings v. AC Hydraulic A/S, 383 F.3d 546 (7th Cir.
2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Juelich v. Yamazaki Mazak Optonics Corp., 682
N.W.2d 565 (Minn. 2004) . . . . . . . . . . . . . . . . . .
22
Kachur v. Yugo Motor Corp., 632 A.2d 1297 (Pa.
1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Kernan v. Kurz-Hastings, Inc., 175 F.3d 236 (2d Cir.
1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Kopke v. A. Hartrodt S.R.I., 629 N.W.2d 662 (Wis.
2001), cert. denied, 534 U.S. 1079 (2002) . . . . . . 4, 21
Lebel v. Everglades Marina, Inc., 558 A.2d 1252 (N.J.
1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Lessnick v. Hollingsworth & Vose Co., 35 F.3d 939
(4th Cir. 1994), cert. denied, 513 U.S. 1151 (1995)
.......................................
29
Luv ‘N Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465
(5th Cir. 2006), cert. denied, __ U.S. __, 126
S. Ct. 2968 (2006) . . . . . . . . . . . . . . . . . . . . . . . . 20, 26
viii
Cited Authorities
Page
Mercantile National Bank v. C.H. Langdeau, 371 U.S.
555 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Oswalt v. Scripto, Inc., 616 F.2d 191 (5th Cir. 1980)
.......................................
11
Pennzoil Products Co. v. Colelli & Associates, Inc.,
149 F.3d 197 (3d Cir. 1998) . . . . . . . . . . . . . . . . .
22
Rodriguez v. Fullerton Tires Corp., 115 F.3d 81 (1st
Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Ruckstuhl v. Owens Corning Fiberglas Corp., 731
So.2d 881 (La. 1999), cert. denied, 528 U.S. 1019
(1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 22
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc.,
9 F.3d 415 (5th Cir. 1993) . . . . . . . . . . . . . . . . . . 17, 20
Savage v. Scripto-Tokai Corp., 147 F. Supp. 2d 86
(D. Conn. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . passim
Sorrells v. R & R Custom Coach Works, Inc., 636
So.2d 668 (Miss. 1994) . . . . . . . . . . . . . . . . . . . .
18
Stanton v. St. Jude Medical, Inc., 340 F.3d 690 (8th
Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Vandelune v. 4B Elevator Components Unlimited, 148
F.3d 943 (8th Cir. 1998), cert. denied, 525 U.S.
1018 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
ix
Cited Authorities
Page
Vermeulen v. Renault, U.S.A., Inc., 965 F.2d 1014
(11th Cir. 1992), cert. denied, 508 U.S. 907 (1993)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 22
Vermont Wholesale Building Products, Inc. v. J.W.
Jones Lumber Co., Inc., __ A.2d __, 2006 WL
3741848 (N.H. Dec. 21, 2006) . . . . . . . . . . . . . . .
19
Wagner v. Unicord Corp., 526 N.W.2d 74 (Neb. 1995)
.......................................
18
Wessinger v. Vetter Corp., 685 F. Supp. 769 (D. Kan.
1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Wiles v. Morita Iron Works Co., Ltd., 530 N.E.2d 1382
(Ill. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20
World-Wide Volkswagen v. Woodson, 444 U.S. 286
(1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Statutes
28 U.S.C. § 1257(a) . . . . . . . . . . . . . . . . . . . . . . . . .
1
735 ILCS 5/2-101 . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
735 ILCS 5/2-209 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Illinois Sup. Crt. Rule 304(a) . . . . . . . . . . . . . . . . . .
4
x
Cited Authorities
Page
Other Authorities
U.S. CONST. amend. XIV, §1 . . . . . . . . . . . . . . . . . . .
2
4 C HARLES A LAN W RIGHT & A RTHUR R. M ILLER ,
FEDERAL PRACTICE AND PROCEDURE §1067.4 (2006)
.......................................
2
MOORE’S FEDERAL PRACTICE § 108.03[1] (2006) . . . .
27
Robert J. Condlin, “Defendant Veto” Or “Totality Of
The Circumstances?” It’s Time For The Supreme
Court To Straighten Out The Personal Jurisdiction
Standard Once Again, 54 Cath. U. L. Rev. 53
(2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 22
Andrew Kurvers Spalding, Note: In The Stream Of
Commerce Clause: Revisiting Asahi In The Wake
Of Lopez And Morrison, 4 Nev. L. J. 141 (2003) . .
17
Christopher M. Porterfield, Which Stream To Follow:
Why The Eleventh Circuit Should Adopt A Broader
Stream Of Commerce Theory In Light Of Growing
E-Commerce Markets, 20 Ga. St. U. L. Rev. 539
(Winter 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
xi
Cited
Authorities
TABLE
OF
APPENDICES
Page
Appendix A — Opinion Of The Illinois Appellate
Court Dated May 26, 2006 . . . . . . . . . . . . . . . . . .
1a
Appendix B — Order Of The Circuit Court Of Cook
County, Illinois Dated August 18, 2004 . . . . . . . .
17a
Appendix C — Order Of The Circuit Court Of Cook
County, Illinois Dated July 21, 2004 . . . . . . . . . .
18a
Appendix D — Order Of The Appellate Court Of
Illinois, First Judicial District Denying Petition For
Rehearing Dated June 29, 2006 . . . . . . . . . . . . . .
19a
Appendix E — Order Of The Supreme Court Of
Illinois Denying Petition For Leave To Appeal
Dated November 29, 2006 . . . . . . . . . . . . . . . . . .
21a
Appendix F — Relevant Statute . . . . . . . . . . . . . . . .
22a
1
Petitioner respectfully petitions for a writ of certiorari to
review the judgment of the Illinois Appellate Court in this case.
OPINIONS BELOW
The order of the Circuit Court of Cook County, Illinois
(per Hogan, J.) granting petitioner’s motion to dismiss the
complaint for lack of personal jurisdiction is not published.
(Appendix (“App.”) 18a) The opinion of the Illinois Appellate
Court reversing (per McNulty, J., joined by Tully and FitzgeraldSmith, JJ.) is published at 366 Ill. App. 3d 419, 851 N.E.2d
693. (App. 1a-16a) The order of the Illinois Appellate
Court denying petitioner’s petition for rehearing is not published.
(App. 19a-20a) The order of the Illinois Supreme Court denying
petitioner’s petition for leave to appeal is to be published at __
Ill. App. 3d __, __ N.E.2d __ (Ill. Nov. 29, 2006) (Table No.
103105). (App. 21a)
JURISDICTION
The Illinois Appellate Court’s judgment was entered on
May 26, 2006. The appellate court entered its order denying
petitioner’s petition for rehearing on June 29, 2006. The Illinois
Supreme Court entered its order denying petitioner’s petition
for leave to appeal on November 29, 2006. Petitioner invokes
this Court’s jurisdiction under 28 U.S.C. § 1257(a).1
1. Cf. Mercantile National Bank v. C.H. Langdeau, 371 U.S. 555,
558 (1963). Venue, like personal jurisdiction
is a separate and independent matter, anterior to the merits
and not enmeshed in the factual and legal issues comprising
the plaintiff’s cause of action. Moreover, we believe that it
serves the policy underlying the requirement of finality in
28 U.S.C. § 1257 to determine now in which state court
appellants may be tried rather than to subject them, and
appellee, to long and complex litigation which may all be
for naught if consideration of the preliminary question of
venue is postponed until the conclusion of the proceedings.
2
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The Due Process Clause of the 14th Amendment to the
Constitution provides that “[n]o State shall make or enforce
any law which shall . . . deprive any person of life, liberty, or
property, without due process of law.”
The relevant provisions of the Illinois Long Arm Statute,
735 ILCS 5/2-209, are reproduced infra at App., 22a.
INTRODUCTION
This product liability case raises an important, recurring,
and unanswered question of personal jurisdiction over
a product or component’s designer, manufacturer, or distributor:
the scope and application of the stream of commerce theory of
minimum contacts. Indeed, “[g]iven the increasingly interstate
and international character of today’s economy and the relatively
free movement of goods and services without regard to state
and national boundaries, few issues of personal jurisdiction are
more important than the status of this stream of commerce
theory.” 4 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL
PRACTICE AND PROCEDURE § 1067.4 (2006).
The many federal courts of appeals and the state supreme
courts which have addressed this issue are deeply split. One
group of courts uses the “stream of commerce” test first
mentioned in World-Wide Volkswagen v. Woodson, 444 U.S.
286 (1980), and advocated by Justice Brennan in his plurality
in Asahi Metal Industry Co., Ltd. v. Superior Court of California,
480 U.S. 102 (1987). A different group of courts applies the
“stream of commerce plus” test promulgated by Justice
O’Connor in a different Asahi plurality.
Since World-Wide Volkswagen and Asahi, the economic
landscape has changed dramatically. As a result of such
developments as the Internet and liberalization of world trade,
domestic and foreign companies of all sizes now have unlimited
access to the United States market. See, e.g., Compuserve, Inc.
v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996):
3
The Internet represents perhaps the latest and greatest
manifestation of these historical, globe-shrinking
trends. It enables anyone with the right equipment
and knowledge . . . to operate an international
business cheaply, and from a desktop. That business
operator, however, remains entitled to the protection
of the Due Process Clause, which mandates that
potential defendants be able ‘to structure their
primary conduct with some minimum assurance as
to where the conduct will and will not render them
liable to suit.’
(Quoting World-Wide Volkswagen, 444 U.S. at 297).
Product liability suits involving the jurisdictional issue
presented by the instant action recur frequently. Here, for
example, the Illinois Appellate Court found that personal
jurisdiction over petitioner in Illinois was constitutionally
permissible solely because petitioner designed a product in Japan
and its U.S. subsidiary in California — a separate corporation
in whose operations petitioner plays no role — bought the design
in Japan, had the product manufactured in Mexico by a Mexican
corporation, and then distributed the product into the national
stream of commerce in the United States, from which it
ultimately came to Illinois. These essential facts are not unique
to Illinois, and with no national uniform interpretation and
application of the stream of commerce theory, some federal and
state courts would decline personal jurisdiction based on them;
others would not. Cf. Savage v. Scripto-Tokai Corp., 147 F. Supp.
2d 86 (D. Conn. 2001) (discussed infra and declining jurisdiction
over petitioner in Connecticut on identical facts).
Without a uniform national interpretation of the stream of
commerce theory of minimum contacts in product liability
actions, any person or business involved in the design,
manufacture, or distribution of a product for nationwide sale is
faced with uncertainty regarding an essential business concern
— whether they may be haled into court in every jurisdiction
where the product with which they were involved is sold,
4
regardless of whether they intended its sale there. Savage, 147
F. Supp. 2d at 93 (“[I]f the Court were to accept plaintiff’s
explanation for why jurisdiction lies in Connecticut, jurisdiction
would of necessity lie in every state in the nation.”). This
uncertainty has created an environment in which “little
predictability remains for potential plaintiffs and defendants in
the present world economy. . . . [I]t is time for the United States
Supreme Court again to provide guidance as to the scope of
due process as related to minimum contacts.” Kopke v. A.
Hartrodt S.R.I., 629 N.W.2d 662, 685 (Wis. 2001), cert. denied,
534 U.S. 1079 (2002) (Crooks, J., dissenting).
STATEMENT OF THE CASE
The federal question presented — Illinois’ exercise of
personal jurisdiction over petitioner — was first raised by
petitioner in the Circuit Court of Cook County, Illinois in its
pre-answer motion to dismiss. (R. C401-466) Petitioner’s
motion was fully briefed and argued, and granted by the trial
court. (R. C401-466, 712-757, 1054; SR. 4-24) Respondent
appealed to the Illinois Appellate Court. (R. C1051-1052) The
question presented was fully briefed and argued in the appellate
court, which reversed the trial court and found that personal
jurisdiction over petitioner was constitutionally permissible.
(App. 1a-16a). The Illinois Supreme Court declined review.
(App. 21a).
A.
Circuit Court Jurisdiction
Respondent brought this action against petitioner and
Scripto-Tokai Corporation, Kmart Corporation, and Partnership
Concepts Realty Management, Inc. in the Circuit Court of Cook
County, Illinois. The circuit court had jurisdiction pursuant to
735 ILCS 5/2-101.
B.
Appellate Court Jurisdiction
The Illinois Appellate Court had jurisdiction pursuant to
Illinois Supreme Court Rule 304(a). (App. 17a)
5
C.
Statement Of Facts
Respondent’s Action
Respondent, individually and as administrator of the estate
of her daughter, decedent Alexis Saia, seeks damages resulting
from Alexis’ death on August 12, 1999. (R. C3-36) Alexis,
then 13 months old, died from injuries sustained in a fire at
respondent’s apartment in Roselle, Illinois on June 3, 1999.
(R. C3-36) Respondent alleged that Alexis’ brother started the
fire with respondent’s “Scripto butane lighter gun” when he
took the lighter “in his sister’s bedroom, [and] a flame shot out,
starting his sister’s crib and bedding on fire.” (R. C7)
Respondent sued Scripto-Tokai Corporation (“Scripto”),
petitioner Tokai Corporation, Kmart Corporation, and
Partnership Concepts Realty Management (the owner of the
apartment complex) asserting claims for strict product liability,
wrongful death, and survival. (R. C3-36, 432-435)
Petitioner Moves To Dismiss The Complaint Against It
For Lack Of Personal Jurisdiction
Petitioner moved to dismiss the complaint against it for
lack of personal jurisdiction. (R. C401-466) Petitioner supported
its motion with, inter alia, the affidavits of Fred Ashley, Scripto’s
Vice President of Administration and Corporate Secretary
(R. C422-424); Takumi Ohnishi, petitioner’s Director (R. C460462); and Tomoyuki Kurata, petitioner’s Vice-General Manager
of International Operation (R. C464-466).
The trial court permitted the parties to conduct written and
deposition discovery limited to personal jurisdiction. (R. C778)
Respondent issued jurisdictional interrogatories to both Scripto
and petitioner, but chose not to depose anyone. (R. C654, 670671, 763)
Based on the Ashley, Ohnishi, and Kurata affidavits
submitted with petitioner’s motion to dismiss, and petitioner
and Scripto’s answers to respondent’s interrogatories (R. C641675), the following undisputed facts were developed.
6
Petitioner
Petitioner is incorporated under the laws of Japan. (R. C460)
Its headquarters, executive offices and principal place of
business are located in Tokyo, and it has no offices in Illinois or
anywhere else in the United States. (R. C460) Petitioner has no
contact with the State of Illinois, to-wit:
• Petitioner has never had a mailing address or telephone
listing within Illinois. (R. C461)
• Petitioner has never been licensed to do business in
Illinois and has never had any employees in Illinois.
(R. C461)
• Petitioner conducts no business in Illinois and has never
maintained an agent for service of process in Illinois.
(R. C461)
• Petitioner has never owned or operated any property,
manufacturing plant, or any other business in Illinois.
(R. C461)
• Petitioner has never employed or hired any sales agent
for the specific purpose of marketing any products in
Illinois. (R. C461)
• Petitioner has never sent any of its officers, agents, or
employees into Illinois to carry on any business
activities on its behalf. (R. C461)
• Petitioner has never distributed, sold, marketed or
advertised any products in Illinois, and it does not
directly profit from the sale or marketing of products
sold in Illinois. (R. C461)
Scripto
Petitioner owns Scripto. (R. C460, 655, 671) Scripto is the
only business headquartered in the U.S. in which petitioner has
an ownership interest. (R. C655, 672)
Scripto is incorporated under Delaware law and has its
principal place of business in Rancho Cucamonga, California.
(R. C422) Scripto follows all of the corporate formalities
7
required by the State of Delaware and Scripto employees alone
make all decisions regarding Scripto’s operations. (R. C423)
Scripto does not contest personal jurisdiction in this matter.
(R. C423)
The Lighter
The utility lighter allegedly used to start the instant fire has
been identified as a GM-9. (R. C420, 423, 511) The GM-9 was
manufactured and assembled exclusively in Mexico by JMP
Mexico, S.A. de C.V. (“JMP”), a Mexican corporation wholly
owned by Scripto. (R. C423) Scripto is the sole U.S. distributor
of the GM-9. (R. C423) It distributed the GM-9 in the United
States between approximately 1996 and the fall of 1999 under
the trade name “Aim ‘n Flame II.” (R. C423)
The GM-9 was designed by petitioner, although Scripto
created its “ornamental appearance.” (R. C465, 650, 668)
Petitioner manufactured some of the component parts for the
GM-9 beginning in 1996, which it sold to other companies.
(R. C465) When petitioner sells a design or component parts to
companies outside of Japan, its involvement with those designs
or parts ends once they reach the purchaser and petitioner is not
involved in decisions concerning how they are used by its
customers. (R. C465)
No Evidence That Petitioner Knew That Its Design/
Component Parts Were To Be Incorporated Into
Products Specifically Headed To Illinois
Affiants Ohnishi, Kurata, and Ashley all attested that
petitioner had no knowledge that the GM-9 lighter was made
with its design/component parts or that the lighter was to be
sold and/or distributed in Illinois:
Ohnishi Affidavit:
15. Tokai has never distributed, sold, marketed
or advertised any products in the State of Illinois,
and does not directly profit from the sale or
marketing of products sold in the State of Illinois.
(R. C461)
8
Kurata Affidavit:
5. When Tokai sells component parts to
companies doing business outside of Japan, Tokai’s
involvement with those parts generally ends when
the parts are delivered to the customer in proper
working order. Tokai is not involved in decisions
concerning how such products are used by Tokai’s
customers. (R. C465)
Ashley Affidavit:
6. Scripto employees make the decisions
regarding the day-to-day operations of Scripto,
including sales, marketing and operational decisions.
7. Tokai has never directed or requested Scripto
to market or sell utility lighters or other products in
the State of Illinois. (R. C423)
Petitioner’s and Scripto’s responses to respondent’s special
interrogatories further demonstrated that petitioner did not know
that its design/component parts had been incorporated into the
GM-9 and that the GM-9 was sold and/or distributed in Illinois:
Petitioner’s Responses To Respondent’s Special Interrogatories:
Tokai has never had any contractual arrangement
with any person or business for the sale of Tokaidesigned lighting rods in the State of Illinois. (R.
C663)
* * *
Tokai has never had any contractual arrangement
with any person or business for the marketing, sale
or distribution of Tokai-designed lighting rods in the
State of Illinois. (R. C664)
* * *
In addition, Tokai has no knowledge of the number
of Scripto-distributed lighting rods that may have
been sold by other entities within the State of Illinois
since 1996. (R. C664)
9
* * *
[Tokai] has no direct knowledge of any lighting rod
sold in the State of Illinois that was, in whole or in
part, designed, manufactured, assembled, or
distributed by it. Tokai does not do business in the
State of Illinois. (R. C666)
* * *
Tokai had no involvement in the sale, marketing or
distribution of the GM-9 lighting rod in the United
States. (R. C668)
Scripto’s Responses To Respondent’s Special Interrogatories:
Tokai had no involvement in the sale, marketing or
distribution of the GM-9 utility lighter in the United
States. (R. C650)
Respondent’s Response To Petitioner’s Motion To Dismiss
Respondent did not submit counter-affidavits or any other
evidence refuting either the affidavits of Fred Ashley, Takumi
Ohnishi, and Tomoyuki Kurata or the responses to her special
interrogatories. (R. C712-722) Instead respondent submitted
only:
(1) petitioner’s responses to her special interrogatories
(R. C728-744);
(2) the results from an Illinois Secretary of State
Corporation Search showing that “Scripto-Tokai
Corporation,” a Delaware corporation, maintains
a registered agent in Illinois for service of process
(R. C746);
(3) the June-July 2001 issue of CPSC Monitor, Consumer
Alert’s update on the Consumer Product Safety
Commission, which states at R. C754 that “ScriptoTokai Corporation” attended the CPSC “Product
Safety Circle Conference” in Oak Brook, Illinois on
June 26, 2001 – two years after the fire at issue
(R. C748-755); and
10
(4) a list of exhibitors at the 2003 International Home &
Housewares Show at McCormick Place in Chicago
on October 11-14, 2003 –four years after the fire
at issue – which includes “Scripto-Tokai Corp.”
(R. C756-757).
The Circuit Court’s Ruling: No Minimum Contacts So No
Personal Jurisdiction Over Petitioner
The circuit court heard oral argument on petitioner’s motion.
(SR. 4-24) At oral argument, respondent’s counsel argued that,
despite petitioner’s lack of minimum contacts with Illinois,
Scripto’s placement of the lighter into the national stream of
commerce was a sufficient basis for personal jurisdiction over
petitioner simply because petitioner owns Scripto:
THE JUDGE: What about the information in there
that Scripto-Tokai does have contacts with Illinois?
The question, can I impute Scripto-Tokai’s contact
with – to the Japanese corporation?
MR. BURKE [respondent’s counsel]: Okay. I
suggest that you can, Judge, in light of the
ownership agreement and the majority ownership
of Scripto-Tokai by Tokai, and through that
agreement, Tokai has arranged for an exclusive
means of getting their product into not only the
U.S., but in Illinois, and for that reason, Judge, I
think they have minimum contacts and I think what
are really unfair efforts to ostensibly insulate
themselves from taking responsibility for what
allegedly is a defective design. (S.R. 12-13; emphasis
added)
The circuit court rejected respondent’s position and granted
petitioner’s motion to dismiss on the ground that it did not have
sufficient minimum contacts with Illinois:
For the reasons set forth in Tokai’s moving papers
and those addressed during oral argument, the Court
finds that Tokai does not have the constitutionally
11
required minimum contacts with Illinois to support
personal jurisdiction. (R. C1054)
Respondent appealed to the Illinois Appellate Court - First
District. (R. C1051-1052)
The Appellate Court Opinion
On May 26, 2006, the Illinois Appellate Court reversed the
trial court’s order. (App. 1a)
The appellate court acknowledged that “in . . . this case,
[petitioner] did not directly market its product in [Illinois], and
[respondent] failed to show the extent of the [petitioner]’s
indirect benefit from sales in [Illinois].” (App. 8a) However,
relying upon the Illinois Supreme Court’s opinion in Gray v.
American Radiator & Standard Sanitary Corp., 176 N.E.2d 761
(1961), as well as Oswalt v. Scripto, Inc., 616 F. 2d 191 (5th
Cir. 1980), and Wessinger v. Vetter Corp., 685 F. Supp. 769
(D. Kan. 1987), the appellate court held that personal jurisdiction
could be imposed upon petitioner because Scripto placed the
lighter into the national stream of commerce, through which
the lighter ultimately ended up in Illinois. (App. 5a-14a) The
appellate court found that “it is a reasonable inference” that
“[petitioner] obtained considerable indirect benefit from the
profits [Scripto] earns from sales in Illinois of lighting rods
[petitioner] designed” (App. 15a) because Scripto “distributed
the lighting rods to various [national] customers, including
K mart, and some of those customers sold [the] lighting rods in
Illinois” (App. 12a-13a):
Here, as in Wessinger, the plaintiff claims that the
defendant’s negligent design caused the injury.
Tokai, like Honda R&D, seeks to profit from its
design through the manufacture and sales, by its
subsidiaries, of the products Tokai designs. Tokai
admits that it manufactured some of the component
parts of the Aim ‘n Flame II lighting rods and then
sent those parts to JMP Mexico, the exclusive
manufacturer of the lighting rods. Tokai’s subsidiary,
12
Scripto, owns JMP. Although Tokai claimed that it
did not direct JMP in the use of the components
Tokai manufactured, Tokai admits that it designed
the lighting rod and JMP manufactured it,
presumably in accord with Tokai’s design. Scripto
then distributed the lighting rods to various
customers, including K mart, and some of those
customers sold Aim ‘n Flame lighting rods in Illinois.
Tokai’s officer swore that Tokai did not directly profit
from the sales in Illinois. Tokai claims that on this
record, the court cannot conclude that Tokai, the
product’s designer, profits in any way from the sales
of its product in Illinois. * * *
(App. 12a-13a)
* * *
Since Tokai owns all shares of the distributor,
Scripto, and Scripto owns the manufacturer, Tokai
obtains all profits from the manufacture and sale in
this state of the product it designed. We find the
record sufficient to support the conclusion that Tokai
obtained considerable indirect benefit from the
profits its wholly owned subsidiary earns from sales
in Illinois of lighting rods Tokai designed.
(App. 15a)
Petitioner filed a petition for rehearing in the appellate court,
which was denied. (App. 19a-20a) Petitioner then filed a petition
for leave to appeal to the Illinois Supreme Court, which was
also denied. (App. 21a)
13
REASONS FOR GRANTING THE PETITION
I.
The Federal Circuits And The State Supreme Courts Are
Deeply Split In Their Application Of The Stream Of
Commerce Theory. Review By This Court Is Necessary To
Establish A Uniform National Standard Upon Which
Defendants In Product Liability Suits May Rely When
Minimum Contacts With The Forum State Are Sought To
Be Established Through The Stream Of Commerce Theory.
A.
The Question Presented: “Which Stream To Follow?” 2
The Court first considered the stream of commerce theory
of minimum contacts in product liability actions in World-Wide
Volkswagen, 444 U.S. 286 (1980). In World-Wide Volkwagen,
the question presented was whether an Oklahoma court could
exercise personal jurisdiction over an automobile retailer and
wholesaler, both New York corporations, in a product liability
action. Id. at 288-289. The defendants’ only contact with
Oklahoma was through the sale of a car to a non-resident
consumer in New York, who then drove the car to Oklahoma
where the subject accident occurred. Id. The Court found no
“efforts [by defendants] to serve, directly or indirectly, the market
for its product in [Oklahoma],” id. at 297, and held that
defendants could not be subjected to personal jurisdiction where
their alleged contacts with the forum state were based on the
unilateral act of the consumer and not on any act of their own.
Id. at 298.
The plaintiffs in World-Wide Volkswagen argued that
“because an automobile is mobile by its very design and purpose
it was ‘foreseeable’ that the [subject automobile] would cause
injury in Oklahoma.” Id. at 295. The Court responded that
2. Christopher M. Porterfield, Which Stream To Follow: Why The
Eleventh Circuit Should Adopt A Broader Stream Of Commerce Theory
In Light Of Growing E-Commerce Markets, 20 Ga. St. U. L. Rev. 539
(Winter 2003).
14
“’foreseeability’ alone has never been a sufficient benchmark
for personal jurisdiction under the Due Process Clause.” Id. at
295. The Court then noted, however, that foreseeability is not
“wholly irrelevant:”
[T]he foreseeability that is critical to due process
analysis is not the mere likelihood that a product
will find its way into the forum State. Rather, 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.
Id. at 297.
Although the World-Wide Volkswagen court held that “the
mere likelihood that the product will find its way into the forum
State” is not “critical to due process analysis,” it also held that
the “forum State does not exceed its powers under the
Due Process Clause if it asserts personal jurisdiction over a
corporation that delivers its products into the stream of
commerce with the expectation that they will be purchased by
consumers in the forum State.” Id. at 298. These arguably
conflicting holdings left open the question of precisely what
quality and quantity of contacts between a product’s non-resident
manufacturer-distributor-designer and the forum state would
demonstrate an “expectation that [its products] will be purchased
by consumers in the forum State.” Id. at 298. While the Court
clearly held that jurisdiction could not be based upon the
foreseeable unilateral actions of a consumer, it was not clear on
when a defendant’s act of participating in the placement of a
product in the stream of commerce that foreseeably could end
up in the forum state would satisfy the minimum contacts
requirement of the Due Process Clause.
Lower courts differed in their interpretation of World-Wide
Volkswagen, as Justice O’Connor noted when the Court next
addressed the question in Asahi Metal Industry Co., Ltd. v.
Superior Court of California, 480 U.S. 102 (1987):
Since World-Wide Volkswagen, lower courts have
been confronted with cases in which the defendant
15
acted by placing a product in the stream of
commerce, and the stream eventually swept
defendant’s product into the forum State, but the
defendant did nothing else to purposefully avail itself
of the market in the forum State. Some courts have
understood the Due Process Clause, as interpreted
in World-Wide Volkswagen, to allow an exercise of
personal jurisdiction to be based on no more than
the defendant’s act of placing the product in the
stream of commerce. Other courts have understood
. . . World-Wide Volkswagen to require the action of
the defendant to be more purposefully directed at
the forum State than the mere act of placing a product
in the stream of commerce.
Id. at 110 (O’Connor, J., plurality opinion).
Asahi presented the Court with the opportunity to clarify
the stream of commerce issue, but it was unable to reach a
majority conclusion. In one plurality opinion, Justice O’Connor –
joined by Chief Justice Rehnquist and Justices Powell and
Scalia – set out the “stream of commerce plus” theory of
minimum contacts. Under the “stream of commerce plus” theory,
a defendant who places its product into the stream of commerce
has minimum contacts with the forum state sufficient to subject
it to jurisdiction only where it has also done something
purposefully directed toward the forum state:
The “substantial connection,” Burger King, 471 U.S.
at 475, 105 S.Ct. at 2184; McGee, 355 U.S. at 223,
78 S.Ct. at 201, between the defendant and the forum
state necessary for a finding of minimum contacts
must come about by an action of the defendant
purposefully directed toward the forum state. Burger
King, supra, 471 U.S. at 476, 105 S.Ct. at 2184;
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774,
104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984). The
placement of a product into the stream of commerce,
without more, is not an act of the defendant
16
purposefully directed toward the forum State.
Additional conduct of the defendant may indicate
an intent or purpose to serve the market in the forum
State, for example, designing the product for the
market in the forum State, advertising in the forum
State, establishing channels for providing regular
advice to customers in the forum State, or marketing
the product through a distributor who has agreed to
serve as the sales agent in the forum State. But a
defendant’s awareness that the stream of commerce
may or will sweep the product into the forum State
does not convert the mere act of placing the product
into the stream an act purposefully directed toward
the forum State.
Id. at 112 (emphasis in original) (O’Connor, J., plurality
opinion).
Justice Brennan – joined by Justices White, Marshall, and
Blackmun – disagreed. Id. at 116-122 (Brennan, J., plurality
opinion). He reasoned instead that minimum contacts exist
whenever the defendant is “aware” that the “final product is
being marketed in the forum state:”
Under [Justice O’Connor’s] view, a plaintiff would
be required to show “[a]dditional conduct” directed
toward the forum before finding the exercise of
jurisdiction over the defendant to be consistent with
the Due Process Clause. Ibid. I see no need for such
a showing, however. The stream of commerce refers
not to unpredictable currents or eddies, but to the
regular and anticipated flow of products from
manufacture to distribution to retail sale. As long as
a participant in the process is aware that the final
product is being marketed in the forum State, the
possibility of a lawsuit there cannot come as a
surprise. Nor will the litigation present a burden for
which there is no corresponding benefit. A defendant
who has placed goods in the stream of commerce
17
benefits economically from the retail sale of the final
product in the forum State, and indirectly benefits
from the State’s laws that regulate and facilitate
commercial activity. These benefits accrue regardless
of whether that participant directly conducts business
in the forum State, or engages in additional conduct
directed toward that State.
Id. at 117 (Brennan, J., plurality opinion).
This Court has not addressed the stream of commerce theory
in the 20 years since Asahi, and its failure in Asahi to reach a
majority on the issue has left unsettled the law of personal
jurisdiction in product liability suits in both federal and state
courts across the country. See, e.g., Ruston Gas Turbines, Inc.
v. Donaldson Co., Inc., 9 F.3d 415, 420 (5th Cir. 1993) (“Asahi
does not provide clear guidance on the ‘minimum contacts’
prong.”); Vermeulen v. Renault, U.S.A. Inc., 965 F.2d 1014,
1024-1025 (11th Cir. 1992), cert. denied, 508 U.S. 907 (1993)
(“[T]he current state of the law regarding personal jurisdiction
is unsettled.” ); Ruckstuhl v. Owens Corning Fiberglas Corp.,
731 So.2d 881, 889 (La. 1999), cert. denied, 528 U.S. 1019
(1999) (“[W]e have no Supreme Court precedent that guides us
as to which theory, if either, represents the law.” ). Indeed,
commentators now refer to personal jurisdiction in product
liability suits as a “quagmire” 3 in which “confusion and
disagreement are the order of the day.” 4
3. Andrew Kurvers Spalding, Note: In The Stream Of Commerce
Clause: Revisiting Asahi In The Wake Of Lopez And Morrison, 4 Nev.
L. J. 141, 155 (2003).
4. Robert J. Condlin, “Defendant Veto” Or “Totality Of The
Circumstances?” It’s Time For The Supreme Court To Straighten Out
The Personal Jurisdiction Standard Once Again, 54 Cath. U. L. Rev.
53, 147 (2004).
18
B.
Three Distinct Approaches.
With no majority in Asahi, the many federal circuit and
state supreme courts that have been faced with a stream of
commerce question in a product liability action have divided
into three dichotomous approaches.
“Stream Of Commerce Plus”
The first group of courts has adopted Justice O’Connor’s
“stream of commerce plus” theory. This group holds
that personal jurisdiction over a product’s manufacturerdesigner-distributor is permissible where the product is placed
in the stream of commerce and where the defendant has
undertaken additional conduct specifically directed toward the
forum state, such as advertising there or designing the
product specifically for its market. This group includes the
First5 and Sixth6 Circuits, as well as the states of Michigan,7
Mississippi, 8 Missouri, 9 Montana, 10 Nebraska, 11 New
5. Rodriguez v. Fullerton Tires Corp., 115 F.3d 81, 85 (1st Cir.
1997); Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 682-683 (1st Cir.
1992).
6. Fortis Corporate Ins. v. Viken Ship Management, 450 F.3d 214,
218-221 (6th Cir. 2006) (“The Sixth Circuit has adopted Justice
O’Connor’s ‘stream of commerce plus’ test from Asahi.”); Bridgport
Music, Inc. v. Still N The Water Publishing, 327 F.3d 472, 479-480 (6th
Cir. 2003), cert. denied, 540 U.S. 948 (2003) (“Although this Circuit
thusfar has avoided expressly adopting a position, ... we make clear
today our preference for Justice O’Connor’s stream of commerce ‘plus’
approach, for the reasons set out in [Asahi].”).
7. Hapner v. Solis Apparatus v. Manufactories, Ltd., 411 N.W.2d
439, 447-450 (Mich. 1987).
8. Sorrells v. R & R Custom Coach Works, Inc., 636 So.2d 668,
669, 674-675 (Miss. 1994).
9. Conway v. Royalite Plastics, Ltd., 12 S.W.3d 314, 318-319 (Mo.
2000).
10. Bedrejo v. Triple E Canada, Ltd., 984 P.2d 739, 742 (Mont.
1999).
11. Wagner v. Unicord Corp., 526 N.W.2d 74, 78-80 (Neb. 1995).
19
Hampshire, 12 Pennsylvania, 13 Rhode Island, 14 and South
Dakota,15 and the District of Columbia.16
The Illinois Supreme Court has not yet affirmatively decided
the question of which test to apply. However, the most recent
decisions from that court — which the appellate court in this
case disregarded — indicate a preference for the “stream of
commerce plus” test. See, e.g., Wiles v. Morita Iron Works Co.,
Ltd., 530 N.E.2d 1382, 1389-1391 (Ill. 1988) (no personal
jurisdiction over Japanese manufacturer of “air cell former”
which injured Illinois worker where record contained no
evidence that defendant knew the “former” was to be installed
in a plant in Illinois at the time it sold the “former” to plaintiff’s
employer; defendant’s knowledge that employer had plants in
Illinois and New Jersey insufficient without more); Connelly v.
Uniroyal, Inc., 389 N.E.2d 155, 157, 160 (Ill. 1980), cert. denied,
444 U.S. 1060 (1980) (Belgian manufacturer of defective tire
subject to personal jurisdiction where the record evidence
demonstrated that defendant knew that 4,000 cars per year
bearing its tires were delivered to dealers in Illinois).
“Stream Of Commerce”
A second group of courts has adopted Justice Brennan’s
“stream of commerce” theory. This group holds that personal
12. Vermont Wholesale Building Products, Inc. v. J.W. Jones
Lumber Co., Inc., __ A.2d __, 2006 WL 3741848 at *6-*9 (N.H. Dec.
21, 2006).
13. Kachur v. Yugo Motor Corp., 632 A.2d 1297, 1300-1301
(Pa. 1993).
14. Anderson v. Metropolitan Life Ins. Co., 694 A.2d 701,703
(R.I. 1997).
15. Frankenfeld v. Crompton Corp., 697 N.W.2d 378, 382-386
(S.D. 2005).
16. Holder v. Haarmann & Reimer Corp., 779 A.2d 264, 275 (D.C.
2001) (“The constitutional standard . . . is not satisfied through ‘the
mere likelihood that a product will find its way into the forum State,’
without any other relevant contacts between the defendant and the
forum.”) (quoting World-Wide Volkswagen).
20
jurisdiction over a product’s manufacturer-designer-distributor
in the forum state is permissible where the product is placed
into the stream of commerce; no additional conduct of the
defendant directed toward the forum state is required. It includes
those courts which have explicitly chosen to follow the
“expectation-stream of commerce” sentence in World-Wide
Volkswagen (444 U.S. at 298) on the ground that World-Wide
Volkswagen was the last Supreme Court case to yield a majority
on the amount of contact required to support personal
jurisdiction under the stream of commerce theory.17 These courts
rely upon World-Wide Volkswagen for the proposition that a
product liability defendant has minimum contacts with the forum
state if it could have foreseen or was aware that a finished
product placed into the stream of commerce would make its
way into the forum state. Taken together, this group includes
the Fifth,18 Seventh,19 and Eighth20 Circuits, along with the states
17. World-Wide Volkswagen cited the Illinois Supreme Court’s
opinion in Gray v. American Radiator & Standard Sanitary Corp., 176
N.E.2d 761 (1961), as “Cf.” support for its “expectation-stream of
commerce” sentence. World-Wide Volkswagen, 444 U.S. at 298.
However, as discussed supra, Illinois courts applying the stream of
commerce theory have (until this case) consistently demonstrated a
preference for the “stream of commerce plus” test by requiring record
evidence of the “additional conduct” Justice O’Connor described in
order to assert jurisdiction over the non-resident defendant. See, e.g.,
Wiles v. Morita Iron Works Co., Ltd., 530 N.E.2d 1382, 1389-1391
(1988), and Connelly v. Uniroyal, Inc., 389 N.E.2d 155, 157 (1979),
cert. denied, 444 U.S. 1060 (1980).
18. Luv n’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469-470
(5th Cir. 2006), cert. denied, __ U.S.__, 126 S. Ct. 2968 (2006); Ruston
Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418-420 (5th
Cir. 1993).
19. Jennings v. AC Hydraulic A/S, 383 F.3d 546, 550-551 (7th
Cir. 2004); Dehmlow v. Austin Fireworks, 963 F.2d 941, 946-948 (7th
Cir. 1992).
20. Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693-694 (8th
Cir. 2003); Clune v. Alimak AB, 233 F.3d 538, 542-545 (8th Cir. 2000),
(Cont’d)
21
of Alabama,21 Arizona,22 North Dakota,23 Utah,24 Washington,25
West Virginia,26 and Wisconsin.27
Deciding Not To Decide
A final group of courts has expressly and explicitly decided
not to decide the question of how to apply the stream of
commerce theory of personal jurisdiction in product liability
suits given the “unfortunate ambiguity created by Asahi.”
Dehmlow, 963 F.2d at 949 (Ripple, J., concurring). These courts
instead decide each case on its own facts, with the result being
“a crazy-quilt pattern of jurisdictional policies and standards
(Cont’d)
cert. denied, 533 U.S. 929 (2001); Vandelune v. 4B Elevator Components
Unlimited, 148 F.3d 943, 947-948 (8th Cir. 1998), cert. denied, 525
U.S. 1018 (1998); Barone v. Rich Bros. Interstate Display Fireworks
Co., 25 F.3d 610, 614-615 (8th Cir. 1994), cert. denied, 513 U.S. 948
(1994).
21. Ex Parte Lagrone, 839 So. 2d 620, 627-628 (Ala. 2002).
22. A. Uberti and C. v. Leonardo, 892 P.2d 1354, 1362-1364 (Ariz.
1995), cert. denied, 516 U.S. 906 (1995).
23. Beaudoin v. South Texas Blood & Tissue Center, 699 N.W.2d
421, 426 (N.D. 2005).
24. Arguello v. Industrial Woodworking Machine Co., 838 P.2d
1120, 1124-1125 (Utah 1992).
25. Grange Ins. Association v. State, 757 P.2d 933, 938 (Wash.
1988), cert. denied, 490 U.S. 1004 (1989) (“[P]urposeful minimum
contacts are established when an out-of-state manufacturer places its
products in the stream of interstate commerce, because under those
circumstances it is fair to charge the manufacturer with knowledge that
its conduct might have consequences in another state.”).
26. Hill v. Showa Denko, K.K., 425 S.E.2d 609, 616 (W. Va. 1992),
cert. denied, 508 U.S. 908 (1993) (“[P]ersonal jurisdiction ‘premised
on the placement of a product into the Stream of Commerce is consistent
with the Due Process Clause,’ and can be exercised without the need to
show additional conduct by the defendant aimed at the forum state.”
(quoting Asahi, Brennan, J., plurality opinion, 480 U.S. at 117).
27. Kopke v. A. Hartrodt S.R.L., 629 N.W.2d 662, 674 (Wis. 2001),
cert. denied, 534 U.S. 1079 (2002).
22
that no longer resembles its historical antecedents or has any
unifying principle, consistency, or predictive capability.”
Condlin, 54 Cath. U. L. Rev. at 147. As the Sixth Circuit noted
when it left this group in favor of joining the First Circuit and
adopting the “stream of commerce plus” theory, the courts who
have not decided “undertak[e] the time-consuming task of
analyzing the facts under all three [Asahi] approaches, and then
. . . select an approach based on the end result.” Bridgport Music,
327 F.2d at 480. This group includes the Second,28 Third,29 and
Eleventh Circuits,30 and the states of Louisiana,31 Minnesota,32
New Jersey, 33 and Texas.34
C.
This Case Is The Appropriate Vehicle For This Court’s
Resolution Of The Question Presented Because It
Presents A Real-Life Example Of The Courts’
Conflict In Action.
In the case at bar, the Illinois Appellate Court applied Justice
Brennan’s “stream of commerce” test to find that personal
jurisdiction over petitioner was constitutionally permissible
because – despite petitioner’s undisputed lack of minimum
contacts with Illinois – a product it designed in Japan was placed
into the national stream of commerce by its U.S. subsidiary.
28. Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 243-244 (2d Cir.
1999).
29. Pennzoil Products Co. v. Colelli & Associates, Inc., 149 F.3d
197, 203-205 (3d Cir. 1998).
30. Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1548 (11th
Cir. 1993), cert. denied, 508 U.S. 907 (1993).
31. Ruckstuhl v. Owens Corning Fiberglas Corp., 731 So. 2d 881,
889-890 (La. 1999), cert. denied, 528 U.S. 1019 (1999).
32. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565,
572 (Minn. 2004).
33. Lebel v. Everglades Marina, Inc., 558 A.2d 1252, 1253 (N.J.
1989).
34. CMMC v. Salinas, 929 S.W.2d 435, 439-440 (Tex. 1996).
23
(App. 12a-15a) By contrast, in Savage v. Scripto-Tokai Corp.,
147 F. Supp. 2d 86 (D. Conn. 2001), the court applied the
“stream of commerce plus” test to identical facts as those here
present and found that Connecticut could not exercise
jurisdiction over petitioner.
The Savage plaintiffs, like respondent here, sued petitioner
after a lighter it designed in Japan caused a house fire. Id. at 88.
Like respondent here, the Savage plaintiffs asserted that personal
jurisdiction over petitioner in Connecticut was constitutionally
permissible because petitioner sold the lighter design to Scripto,
and Scripto had the lighter manufactured in Mexico by a
Mexican corporation and then distributed the lighter into the
national stream of commerce from which it ended up in
Connecticut. Id. at 89-90. As here, it was undisputed in Savage
that petitioner had no minimum contacts with Connecticut.
Id. at 88-90.
The district court granted petitioner’s motion to dismiss
for lack of personal jurisdiction, applying the “stream of
commerce plus” test (Id. at 92) because, it reasoned, “the focus
must remain on the defendant’s contacts with the forum state”
(Id. at 93):
It is undisputed that [petitioner] has no specific
connections to the State of Connecticut, and plaintiff
conceded at oral argument that if the Court were to
accept plaintiff’s explanation for why jurisdiction
lies in Connecticut, jurisdiction would of necessity
lie in every state in the nation. Such “national
contacts” or “aggregate contacts” have been
recognized as a basis for jurisdiction, when they have
been recognized at all, only in federal question cases
involving statutes authorizing nationwide service of
process. The Court agrees with [petitioner] that in
the absence of any congressional enactment
providing for national jurisdiction over foreign
corporations for products liability purposes, the
24
focus must remain on [petitioner]’s contacts with
the forum state.
Id. at 93 (citations omitted).
* * *
The Court concludes that this record does not
constitute a prima facie showing of jurisdiction over
[petitioner], because it does not allow the inference
that [petitioner] injected the Aim ‘n Flame lighter
into the stream of commerce, or engaged in any of
the additional factors necessary under Justice
O’Connor’s “stream of commerce plus” theory.
[Petitioner] has not manufactured the product since
1991; in fact, it appears that the manufacturing
facilities in Mexico deal with Scripto, not the
corporate parent, [petitioner]. The mere fact that
[petitioner] is designer of the subject product is
insufficient to create personal jurisdiction; accepting
such a theory would allow for the exercise of
jurisdiction over every basement inventor in the
world, simply because a product he or she conceived
was manufactured and ended up in Connecticut.
Id. at 94 (emphasis added).
Of note, the Savage court — unlike the Illinois Appellate
Court here — specifically held that petitioner’s ownership of
Scripto was an insufficient basis for personal jurisdiction:
While plaintiffs purport not to rely on aggregate
contacts as the source for jurisdiction here, their
theory — that establishing a national distribution
system through a wholly-owned subsidiary
constitutes purposeful availment — is really just that.
However, mere ownership by a parent corporation
of a subsidiary corporation present in the forum state
generally will not subject the parent to personal
jurisdiction in that forum. This rule applies even
25
when the separation between parent and subsidiary
is merely formal, as long as it is real.
Id. at 93 (citations omitted).
There can be no clearer illustration of the courts’ conflict
on the stream of commerce question than comparison of the
instant case with Savage. On the exact same facts and legal
theories, jurisdiction over the same defendant was found
constitutionally permissible in one state, but not in another.
Without Supreme Court resolution, this scenario will continue
throughout the country.
II.
This Conflict Creates Significant Problems For All
Parties To A Product Liability Action.
Like all businesses, product designers, manufacturers, and
distributors frequently structure their business operations to
avoid contact with certain states. They do this for a variety of
reasons including taxes; labor costs; right-to-work/union issues;
the state regulatory environment; quality of the labor force; and
the state’s educational infrastructure. When a business entity
actively and affirmatively avoids contact with a particular state,
it necessarily follows that the business does not have the
minimum contacts with that state necessary for that state to
exercise jurisdiction over it consistent with the Due Process
Clause. World-Wide Volkswagen recognized the point:
The Due Process Clause, by “ensuring the orderly
administration of the laws,” International Shoe Co.
v. Washington, 326 U.S., at 319, 66 S. Ct., at 159,
gives 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.
World-Wide Volkswagen, 444 U.S. at 297. The minimum
contacts test applicable to defendants in a product liability suit
should thus provide certainty to those involved in the design,
26
manufacture, or distribution of a product which is placed in the
stream of commerce. Product designers, manufacturers, and
distributors should be able to plan for the potential of defending
a suit in a particular state, or they should be able to avoid contacts
with a particular state. No one can plan appropriately if the
applicable personal jurisdiction standards differ across the
country, as Luv n’ Care v. Insta-Mix, Inc., 438 F.3d 465 (5th
Cir. 2006), cert. denied, __ U.S. __, 126 S. Ct. 2968 (2006),
illustrates.
In Luv n’ Care, a Fifth Circuit majority applied the “stream
of commerce” theory and found that jurisdiction over the
defendant bottle designer was permissible in Louisiana despite
the fact that defendant was a Colorado corporation with no
contacts to Louisiana. Id. at 470-471. The majority based its
decision on the fact that defendant sold approximately 82,000
of its bottles to Wal-Mart in Colorado, who eventually
distributed them in Louisiana without defendant’s knowledge.
Id. at 471-474. In reaching this conclusion, the majority rejected
defendant’s argument that it had “structured its primary conduct
to avoid jurisdiction by including in the vendor agreement a
condition that transfers ownership from [defendant] to Wal-Mart
at the time that Wal-Mart receives its shipments in Colorado
Springs” (Id. at 471):
We disagree with [defendant] that this conclusion
means that it must choose between doing business
with Wal-Mart or being subject to suit in all fifty
states. It is possible that [defendant] will avoid suit
in a jurisdiction that requires some additional act
beyond “mere foreseeability” for personal
jurisdiction to attach. See, e.g., Boit v. Gar-Tec
Prods., Inc., 967 F.2d 671, 683 (1st Cir. 1992). . . .
[Defendant] could also attach conditions to its
vendor agreement that forbid Wal-Mart from
shipping to those states that operate under a “mere
foreseeability” regime, or to all distribution centers
27
outside the Great Plains, or to any forum in which
mounting a defense would be inconvenient.
Id. at 472 n.13.
Products liability defendants are not the only ones affected
by the current conflict. Plaintiffs will also benefit from a national
uniform rule. A court’s lack of personal jurisdiction is “a ground
that will permit a subsequent federal court or a sister-state court
to refuse to enforce the judgment rendered without jurisdiction.”
MOORE’S FEDERAL PRACTICE § 108.03[1] (2006). Without a
uniform national rule, a plaintiff may not be able to have a
judgment enforced in a state using the “stream of commerce
plus” test if the judgment was entered by a state using the “stream
of commerce” test or vice versa. Cf. Griffis v. Luban, 646 N.W.2d
527, 536-537 (Minn. 2002) (refusing to enforce a default
judgment in Alabama lawsuit because Minnesota court found
that Alabama court lacked jurisdiction due to what Minnesota
court believed was an incorrect interpretation of Calder v. Jones,
465 U.S. 783 (1984)).
In short, the nation needs one uniform standard for personal
jurisdiction in product liability actions.
III.
The “Stream Of Commerce Plus” Test Is The Most
Consistent With Federalism And Due Process.
Justice O’Connor’s “steam of commerce plus” test should
be adopted by this Court as the national uniform standard for
determining personal jurisdiction in product liability actions
because it is the test that most closely comports with Federalism
and Due Process.
In World-Wide Volkswagen, the Court addressed the
interplay between the concept of minimum contacts and the
principles of Federalism:
The concept of minimum contacts . . . can be seen
to perform two related, but distinguishable,
functions. It protects the defendant against the
burdens of litigating in a distant or inconvenient
28
forum. And it acts to ensure that the States through
their courts, do not reach out beyond the limits
imposed on them by their status as coequal
sovereigns in a federal system.
World-Wide Volkswagen, 444 U.S. at 291-292. The constitutional
principles of Federalism thus require that a defendant’s
minimum contacts with the forum state be established as a
necessary prerequisite to jurisdiction:
[W]e have never accepted the proposition that state
lines are irrelevant for jurisdictional purposes, nor
could we, and remain faithful to the principles of
interstate federalism embodied in the Constitution.
The economic interdependence of the States was
foreseen and desired by the Framers. In the
Commerce Clause, they provided that the nation was
to be a common market, a “free trade unit” in which
the States are debarred from acting as separable
economic entities. H.P. Hood & Sons, Inc. v. Du
Mond, 336 U.S. 525, 538, 69 S. Ct. 657, 665, 93 L.
Ed. 865 (1949). But the Framers also intended that
the States retain many essential attributes of
sovereignty, including, in particular, the sovereign
power to try causes in their own courts. The
sovereignty of each State, in turn, implied a
limitation on the sovereignty of all of its sister States
– a limitation express or implicit in both the original
scheme of the Constitution and the Fourteenth
Amendment.
Id. at 293.
Justice O’Connor’s “stream of commerce plus” test protects
state sovereignty by requiring a showing that defendant
purposefully directed its actions toward the forum state in some
way beyond the placement of a product into the stream of
commerce. Asahi, 480 U.S. at 112 (O’Connor, J., plurality
opinion). By contrast, the “stream of commerce” test erases state
boundaries – under that test, “jurisdiction would of necessity
29
lie in every state in the nation.” Savage, 147 F. Supp. 2d at 93.
See also, Lessnick v. Hollingsworth & Vose Co., 35 F.3d 939,
945 (4th Cir. 1994), cert. denied, 513 U.S. 1151 (1995) (“To
permit a state to assert jurisdiction over any person in the country
whose product is sold in the state simply because a person must
expect that to happen destroys the notion of individual
sovereignties inherent in our system of federalism.”). By
requiring the defendant to take an action directed toward the
forum state before jurisdiction can be found, the “stream of
commerce plus” test upholds the unique sovereignty of each
state.
The “stream of commerce plus” test also best meets the
requirements of Due Process, under which a “defendant’s
contacts with the forum State must be such that maintenance of
the suit does not offend traditional notions of fair play and
substantial justice.” World-Wide Volkswagen, 444 U.S. at 292
(internal quotation omitted). It is inherently unfair – as the
“stream of commerce” test allows – to “subject defendants to
judgment in locations based on the activity of third persons and
not the deliberate conduct of the defendant, making it impossible
for defendants to plan and structure their business contacts and
risks.” Lessnick, 35 F. 3d at 945. Indeed, the “stream of
commerce” test in those jurisdictions where it is applied has
created the precise result that was rejected in World-Wide
Volkswagen: that “[e]very seller of chattels would in effect
appoint the chattel his agent for service of process. His
amenability to suit would travel with the chattel.” World-Wide
Volkswagen, 444 U.S. at 295.
30
CONCLUSION
For all of the foregoing reasons, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
MELISSA A. MURPHY-PETROS
Counsel of Record
DOMINICK W. SAVAIANO
MELINDA S. KOLLROSS
TORRENCE E. LEWIS
CLAUSEN MILLER PCZ
Attorneys for Petitioner
10 South LaSalle Street
Suite 1600
Chicago, Illinois 60603
(312) 855-1010
1a
APPENDIX A — OPINION
Appendix OF
A THE ILLINOIS
APPELLATE COURT DATED MAY 26, 2006
SIXTH DIVISION
May 26, 2006
Nos. 1-04-2609 and 1-04-2736 (consolidated)
HELEN M. SAIA, Individually, and as Special Administrator
of the Estate of Alexis K. Saia, a Deceased Minor,
Plaintiff-Appellant,
v.
SCRIPTO-TOKAI CORPORATION, a California
Corporation, K MART CORPORATION, a Michigan
Corporation, and PARTNERSHIP CONCEPTS REALTY
MANAGEMENT, INC., an Illinois Corporation,
Defendants,
and
TOKAI CORPORATION, a Japanese Corporation,
Defendant-Appellee.
Honorable
Michael J. Hogan, Judge Presiding
2a
Appendix A
PRESIDING JUSTICE McNULTY delivered the opinion
of the court:
Tokai, a Japanese corporation, designed a lighter and
gave its subsidiary, Scripto-Tokai (Scripto), exclusive right
to distribute the lighter in the United States. Helen Saia, a
consumer who bought one of the lighters in Illinois, claims,
in this lawsuit, that Tokai designed the lighter negligently
and the design caused the death of her child. Scripto admits
that Illinois courts have jurisdiction over it, but Scripto argues
that it has no liability for negligent design because it did not
design the lighter. Tokai moved to dismiss the lawsuit for
lack of personal jurisdiction. The trial court held that due
process did not permit the exercise of jurisdiction over Tokai
because it did not conduct any business in Illinois. Saia
appeals.
This case presents the question of whether a foreign
corporation that designs a product can immunize itself from
liability for negligent design by marketing the product
through a subsidiary. We hold that it cannot. We find that the
use of a subsidiary to introduce the product it designed to
Illinois markets suffices for the exercise of personal
jurisdiction over the foreign corporation for an action for
negligent design.
BACKGROUND
On June 3, 1999, an apartment building in Roselle,
Illinois, caught fire. Alexis Sala died a few months later. Her
mother, Helen Saia, special administrator of Alexis’s estate,
sued Tokai, Scripto, and others, alleging that Helen’s three-
3a
Appendix A
year-old son got his hands on an Aim ‘n Flame II lighting
rod while the family slept on June 3, 1999. A flame from
that rod started the fire that led to Alexis’s death. The family
bought the lighting rod at a K mart in Illinois.
Helen sought to recover on theories of strict products
liability and negligent design. Scripto admitted in its answer
that it distributed the Aim ‘n Flame II lighting rod, but it
claimed that Tokai, not Scripto, designed the rod.
Tokai moved to dismiss the complaint for lack of
personal jurisdiction. Tokai’s director swore in an affidavit
that Tokai had no offices, no mailing address and no local
telephone listing in Illinois, it never had any employees in
Illinois, and it transacted no business in Illinois. Tokai never
sent its officers into Illinois to conduct any business, it did
not directly distribute its products in Illinois, and it “does
not directly profit from the sale or marketing of products
sold in the state of Illinois.” However, the director admitted
that Tokai owned all stock of its subsidiary, Scripto.
A manager for Tokai admitted that Tokai designed the
Aim’n Flame II lighting rod. Tokai made Scripto its exclusive
distributor in the United States for its lighting rods and other
lighters, but “this distributor arrangement has not been
reduced to a formal agreement.” Scripto’s subsidiary, JMP
Mexico, manufactured the lighting rods. Tokai’s manager
swore that “Tokai does not control the marketing or
distribution of lighting rods * * * distributed by Scripto.”
An officer of Scripto similarly said in an affidavit that “Tokai
has never directed or requested Scripto to market or sell utility
lighters * * * in the state of Illinois.” Tokai manufactured
4a
Appendix A
some of the component parts of the Aim ‘n Flame II lighting
rods. The manager swore that “Tokai is not involved in
decisions concerning how [component] parts are used by
Tokai’s customers,” including JMP Mexico.
The court permitted the parties to conduct discovery
limited to the issue of personal jurisdiction over Tokai. In its
verified answer to special interrogatories, Scripto said it
distributed Aim ‘n Flame lighting rods to some of its
customers, including K mart, and the customers resold the
lighting rods to consumers in Illinois. Scripto refused to
disclose the names of other customers that may have resold
the lighting rods in Illinois, and it refused to divulge the
number of units it shipped or any terms of its contracts.
Scripto and Tokai both claimed they were “unaware of the
precise numbers of [Aim ‘n Flame II lighting rods] re-sold
by its customers in the State of Illinois.
In an interrogatory Helen sought information concerning
“the amount of revenue received by TOKAI * * * as a result
of the sale of any product, including, but not limited to, * * *
Aim N Flame Lighters within the State of Illinois since 1996.”
Tokai answered: “[A]s Tokai reasonably construes this
Interrogatory, Tokai responds as follows: None with respect
to lighting rods.” But Tokai admitted that its agreement with
Scripto permitted sales of its lighting rods in Illinois.
At oral argument the trial judge challenged Tokai’s
assertion that it did not directly profit from sales of Aim ‘n
Flame II lighting rods in Illinois. Tokai’s attorney said:
5a
Appendix A
“There’s no evidence in this case that Tokai
garnered any profit.
***
* * * Honestly, I don’t want to make a
misrepresentation as to the financial setup of if
they’re compensated for the design or not. The
point is there is no evidence in the record * * *
***
* * * Tokai at one point manufactured and
distributed in the United States [a different model
Aim ‘n Flame] utility lighter, so arguably there’s
a connection with the [other model] utility lighter
in the United States. No such connection exists
with the lighter at issue here.”
The trial court granted Tokai’s motion to dismiss the
complaint against Tokai for lack of personal jurisdiction.
ANALYSIS
Tokai argues first that we should ignore all discovery
and affirm because the complaint does not state sufficient
facts to establish a prima facie case for personal jurisdiction.
Tokai did not raise this issue in the trial court. “Generally,
pleading defects must be raised at trial so that they
may be remedied; otherwise, the defects are waived.” In re
Andrea D, 342 Ill. App. 3d 233, 242 (2003). If the affidavits,
discovery responses and other evidence before the trial court
6a
Appendix A
show that Helen could allege grounds for personal
jurisdiction, but we find that the complaint does not include
such allegations, we must remand to permit Helen to amend
the complaint. See Builders Bank v. Barry Finkel &
Associates, 339 Ill. App. 3d 1, 10 (2003). The alleged
deficiency of the complaint cannot warrant affirmance here.
The court in Gaidar v. Tippecanoe Distribution Service,
Inc., 299 Ill. App. 3d 1034 (1998), explained the applicable
standard of review. Because the trial court heard no testimony
and decided the issue of personal jurisdiction based solely
on documents in the record, we review the judgment de novo.
Gaidar, 299 Ill. App. 3d at 1040. The plaintiff bears the
burden of proving a prima facie case for jurisdiction. Gaidar,
299 Ill. App. 3d at 1040-41. A defendant’s uncontradicted
evidence can in some cases defeat jurisdiction. Gaidar, 299
Ill. App. 3d at 1041. If the parties’ evidence leaves a material
issue of fact whose resolution will determine whether the
trial court has personal jurisdiction over the defendant, the
trial court must hold an evidentiary hearing concerning
jurisdiction. Stein v. Rio Parismina Lodge., 296 Ill. App. 3d
520, 523 (1998). The Illinois long-arm statute now permits
the exercise of jurisdiction to the extent due process concerns
permit. Kostal v. Pinkus Dermatopatholoqy Laboratory, P.C.,
357 Ill. App. 3d 381, 386 (2005). Therefore, we review the
record only to determine whether the uncontradicted facts
here demonstrate that constitutional due process forbids the
exercise of personal jurisdiction over Tokai. Kostal, 357 Ill.
App. 3d at 387.
Helen argues that Illinois has jurisdiction over Tokai
because Tokai introduced its lighting rods into the stream of
7a
Appendix A
commerce, knowing that its subsidiary would distribute the
rods to retailers that would market them in Illinois. Tokai
counters first that Helen waived the stream-of-commerce
argument by failing to raise it in the trial court. Waiver
constrains the parties but not this court. Poullette v.
Silverstein, 328 Ill. App. 3d 791, 797 (2002). Moreover, the
court should not dismiss the complaint for want of personal
jurisdiction if documents in the record can support a finding
of jurisdiction. See Bell v. Louisville & Nashville R.R. Co.,
106 Ill. 2d 135, 142 (1985).
The court applied the stream-of-commerce theory of
jurisdiction in Oswalt v. Scripto, Inc., 616 F.2d 191 (5th Cir.
1980). In that case the plaintiff asked the federal court in
Texas to exercise jurisdiction over Tokai-Seiki, a Japanese
corporation. Tokai-Seiki manufactured a cigarette lighter and
sold it to Scripto, the exclusive distributor for Tokai-Seiki’s
lighters in the United States. Scripto told Tokai-Seiki of its
intention to distribute the lighters to a customer for resale
through the customer’s national retail outlets. Oswalt, 616
F.2d at 197. The record did not show how many lighters
reached Texas. The appellate court held:
“Tokai-Seiki delivered millions of the lighters to
Scripto with the understanding that Scripto would
be the exclusive distributor for the United States
and that Scripto would be selling the lighters to a
customer with national retail outlets. There is
nothing in this record to indicate that Tokai-Seiki
attempted in any way to limit the states in which
the lighters could be sold. To the contrary, the
record shows that Tokai-Seiki had every reason
8a
Appendix A
to believe its product would be sold to a nationwide market, that is, in any or all states. Moreover,
the record shows that Texas was one of the states
in which the lighters were in fact marketed, the
distribution chain including a Texas wholesaler
and a Texas retail store. Given this distributorship
arrangement, Tokai-Seiki’s conduct and
connection with Texas are such that it should
reasonably anticipate being haled into court in
Texas.” Oswalt, 616 F.2d at 199-200.
The court particularly noted that the exercise of jurisdiction
over Tokai-Seiki comported with the principles our supreme
court stated in Gray v. American Radiator & Standard
Sanitary Corp., 22 Ill. 2d 432 (1961). Oswalt, 616 F.2d at
201-02.
In Gray, as in Oswalt and this case, the defendant did
not directly market its product in the state that exercised
jurisdiction, and the plaintiff failed to show the extent of the
defendant’s indirect benefit from sales in the forum state.
The defendant in Gray manufactured a safety valve that a
manufacturer in another state incorporated into a water heater
eventually installed in Illinois. The plaintiff alleged that she
suffered injury when the heater exploded due to negligent
construction of the safety valve. The court said:
“[T]he defendant’s only contact with this
State is found in the fact that a product
manufactured in Ohio was incorporated, in
Pennsylvania, into a hot water heater which in the
course of commerce was sold to an Illinois
9a
Appendix A
consumer. The record fails to disclose whether
defendant has done any other business in Illinois,
either directly or indirectly * * *. We do not think,
however, that doing a given volume of business
is the only way in which a nonresident can form
the required connection with this State. * * *
***
* * * [T]he relevant inquiry is whether
defendant engaged in some act or conduct by
which he may be said to have invoked the benefits
and protections of the law of the forum. * * *
***
In the case at bar defendant does not claim
that the present use of its product in Illinois is an
isolated instance. While the record does not
disclose the volume of [the defendant’s] business
or the territory in which appliances incorporating
its valves are marketed, it is a reasonable inference
that its commercial transactions, like those of
other manufacturers, result in substantial use and
consumption in this State. To the extent that its
business may be directly affected by transactions
occurring here it enjoys benefits from the laws of
this State, and it has undoubtedly benefited, to a
degree, from the protection which our law has
given to the marketing of hot water heaters
containing its valves. Where the alleged liability
arises, as in this case, from the manufacture of
10a
Appendix A
products presumably sold in contemplation of use
here, it should not matter that the purchase was
made from an independent middleman or that
someone other than the defendant shipped the
product into this State.
With the increasing specialization of
commercial activity and the growing
interdependence of business enterprises it is
seldom that a manufacturer deals directly with
consumers in other States. The fact that the benefit
he derives from its laws is an indirect one,
however, does not make it any the less essential
to the conduct of his business; and it is not
unreasonable, where a cause of action arises from
alleged defects in his product, to say that the use
of such products in the ordinary course of
commerce is sufficient contact with this State to
justify a requirement that he defend here.” Gray,
22 Ill. 2d at 438-42.
The court in Wessinger v. Vetter Corp., 685 F. Supp. 769
(D. Kan. 1987), applied similar principles to a product’s
designer. In that case the plaintiff alleged that he suffered
injury due to the negligent design of a Honda motorcycle.
He sued Honda Research & Development Co. (Honda R&D).
Honda R&D moved to dismiss for lack of personal
jurisdiction. Honda R&D designed the motorcycle at issue,
but it did not manufacture or distribute motorcycles. The
court said:
11a
Appendix A
“‘While [the defendant] greatly profits from
the sale of [its] vehicles in the United States, it
claims that it is immune from all jurisdictional
claims against it in the United States. The court
views this as a company which seeks to reap all
of the benefits without incurring the resulting
liabilities and costs. . .
* * * Any inconvenience to defendant in
defending this lawsuit is clearly outweighed by
Kansas’ interest in protecting its citizens from
injury. The court finds that it would be
fundamentally unfair to allow a foreign
manufacturer to insulate himself from the
jurisdiction of this court by use of an exclusive
distributor * * *. [Cunningham v. Subaru of
America, Inc., 631 F. Supp. 132, 136 (D. Kan.
1986).]
***
First, Honda R & D’s design may be likened
to a component of the Honda motorcycle; in fact,
it is a component which controls all other
components. [Citation.] Viewed as such, the
design is a product.
Second, Honda R & D indirectly placed the
product into the stream of commerce. It regularly
sold its designs to its parent, Honda, which
manufactured motorcycles from the designs and
sold the motorcycles to American Honda, another
12a
Appendix A
wholly-owned subsidiary, which distributed the
motorcycles throughout the United States. Given
the relationship among the corporations, Honda
R & D undoubtedly knew that the finished
products made from its design would regularly
be sold in Kansas. [Citation.] Because of the
absence of evidence regarding the issue, we do
not here hold that Honda R & D, Honda, and
American Honda are so tightly related that the
subsidiaries are mere alter-egos of the parent.
[Citations.] Rather, we simply refer to the
relationship to support our conclusion that Honda
R & D knowingly, regularly, and indirectly placed
its component product, the design, into the stream
of commerce.
Third, Honda R & D’s product, the design, is
an alleged source of Wessinger’s injuries. * * *
In summary, the court * * * finds that the
interests of Wessinger in obtaining relief and of
Kansas in protecting its citizens from injury by
inadequately designed products are substantial and
outweigh any inconvenience or burden on Honda
R & D.” Wessinger, 685 F. Supp. at 776-78.
Here, as in Wessinger, the plaintiff claims that the
defendant’s negligent design caused the injury. Tokai, like
Honda R&D, seeks to profit from its design through the
manufacture and sales, by its subsidiaries, of the products
Tokai designs. Tokai admits that it manufactured some of
the component parts of the Aim ‘n Flame II lighting rods
13a
Appendix A
and then sent those parts to JMP Mexico, the exclusive
manufacturer of the lighting rods. Tokai’s subsidiary, Scripto,
owns JMP. Although Tokai claimed that it did not direct JMP
in the use of the components Tokai manufactured, Tokai
admits that it designed the lighting rod and JMP manufactured
it, presumably in accord with Tokai’s design. Scripto then
distributed the lighting rods to various customers, including
K mart, and some of those customers sold Aim ‘n Flame
lighting rods in Illinois.
Tokai’s officer swore that Tokai did not directly profit
from the sales in Illinois. Tokai claims that on this record,
the court cannot conclude that Tokai, the product’s designer,
profits in any way from the sales of its product in Illinois.
Tokai cites, as support, Savage v. Scripto-Tokai Corp., 147
F. Supp. 2d 86 (D. Conn. 2001).
In Savage a fire caused by an Aim ‘n Flame lighting rod
injured the plaintiffs. The court held:
“Significantly, Tokai did not manufacture the final
product, only unidentified components, and so did
not ship the finished product to Scripto. Further,
the record contains no internal memoranda or
other communications between Scripto and its
corporate parent, such as sales reports or profit
statements, which could permit an inference that
Tokai was aware of or had some role in the
nationwide scope of Scripto’s distribution of
Aim n’ Flames.
14a
Appendix A
It is undisputed that Tokai has no specific
connections to the State of Connecticut * * *.
***
* * * The mere fact that Tokai is designer of
the subject product is insufficient to create
personal jurisdiction; accepting such a theory
would allow for the exercise of jurisdiction over
every basement inventor in the world, simply
because a product he or she conceived was
manufactured and ended up in Connecticut. In the
absence of any contract spelling out the terms of
their arrangement, * * * or any other evidence
describing the nature of any operational
relationship between Scripto and Tokai, plaintiff’s
record is insufficient to allow the constitutional
exercise of jurisdiction over Tokai.
* * * Were the rhetoric in plaintiff’s brief—
that Tokai’ sought to establish itself as a player in
the national market for utility lighters, and played
an active role in pursing that goal’ and that Tokai
‘created and controlled an enormous distribution
chain in the U.S. and Connecticut’—borne out by
the evidence submitted in opposition to the motion
to dismiss, the result in this case might well have
been different. Being haled into court in each of
the United States might be considered a fair price
to pay for directed involvement in international
commerce, and due process would perhaps not be
abridged by the Court’s assertion of jurisdiction
15a
Appendix A
over Tokai in such circumstances. [Citation.]
However, there is no evidence that Tokai is indeed
the ‘international player’ plaintiff describes. On
the facts before it, the Court can reach no
conclusion but that the plaintiffs have failed to
meet their burden of demonstrating the existence
of personal jurisdiction over Tokai.” Savage, 147
F. Supp. 2d at 93-95.
We disagree. Under the reasoning of Gray and Oswalt,
where the defendant does not claim that the use in Illinois is
an isolated instance, “it is a reasonable inference that its
commercial transactions, like those of other [product
designers], result in substantial use and consumption in this
State.” Gray, 22 111. 2d at 442. Since Tokai owns all shares
of the distributor, Scripto, and Scripto owns the manufacturer,
Tokai obtains all profits from the manufacture and sale in
this state of the product it designed. We find the record
sufficient to support the conclusion that Tokai obtained
considerable indirect benefit from the profits its wholly
owned subsidiary earns from sales in Illinois of lighting rods
Tokai designed.
Tokai argues that Illinois has no interest in jurisdiction
over Tokai because Scripto has submitted to the jurisdiction
of Illinois courts, and it has sufficient insurance coverage to
compensate Helen. In Samuels v. BMW of North America,
Inc., 554 F. Supp. 1191 (E.D. Tex. 1983), the court found
that it lacked jurisdiction over the foreign manufacturer of
the allegedly defective car, because the court had jurisdiction
over the domestic distributor of the car. But in that case the
distributor gave the plaintiff a warranty covering the
16a
Appendix A
automobile, and the plaintiff presented no issue the parties
could not fully litigate in the lawsuit against the distributor.
Here, Helen has a claim based on the lighting rod’s
negligent design, and Scripto has answered that it did not
design the lighting rod and it has not in any way accepted
responsibility for the alleged negligence in that design. Helen
may recover in strict liability for all her loss, but she also
may fail to recover under the strict liability counts. Defenses
that do not apply to negligent design cases may defeat cases
in strict liability. See Blue v. Environmental Engineering,
Inc., 215 Ill. 2d 78, 95-97 (2005). If Scripto succeeds in
persuading the trial court that it has no responsibility for the
negligent design, Helen may not have any domestic forum
for litigating her negligence claim. Illinois has an interest in
providing its citizens effective redress for negligent design
of products distributed here, and Illinois cannot protect this
interest unless it exercises jurisdiction over foreign designers
that use subsidiaries to distribute the products they design.
Following Gray, Oswalt and Wessinger, we find that
Tokai has sufficient contacts with Illinois for the court to
exercise jurisdiction over Tokai for purposes of litigating
Helen’s claim that Tokai negligently designed the Aim ‘n
Flame II lighting rods. Accordingly, we reverse the judgment
of the trial court and remand for further proceedings on the
cause of action.
Reversed and remanded.
TULLY and FITZGERALD-SMITH, JJ., concur.
17a
APPENDIX B — ORDER
OF THE
Appendix
B CIRCUIT COURT
OF COOK COUNTY, ILLINOIS
DATED AUGUST 18, 2004
CIRCUIT COURT OF COOK COUNTY, ILLINOIS
No. 03 L 11100
HELEN M. SAIA, et al.
v.
SCRIPTO-TOKAI, et al.
ORDER
This matter coming in for Plaintiffs Emergency Motion
for Rule 304(a) finding, and due notice having been served,
and all parties having appeared by counsel, and the court
being duly advised in the premises,
It is hereby ordered that said motion is allowed, and
pursuant to Supreme Court Rule 304(a), the Court finds that
there is no just reason to delay the enforcement or appeal of
the Court’s July 21, 2004 order dismissing Tokai Corporation
for lack of personal jurisdiction.
Judge Michael J. Hogan
18a
Appendix
C CIRCUIT COURT
APPENDIX C — ORDER
OF THE
OF COOK COUNTY, ILLINOIS
DATED JULY 21, 2004
CIRCUIT COURT OF COOK COUNTY, ILLINOIS
No. 03 L 11100
HELEN M. SAIA, et al.
v.
SCRIPTO-TOKAI, et al.
ORDER
This motion being before the Court on Tokai
Corporation’s Motion to Dismiss for Lack of Personal
Jurisdiction, due notice having been given, and all parties
having the opportunity to be heard, IT IS HEREBY
ORDERED THAT:
1. For the reasons set forth in Tokai’s moving
papers and those addressed during oral
argument, the Court finds that Tokai does not
have the constitutionally required minimum
contacts with Illinois to support personal
jurisdiction.
2. Accordingly, Tokai’s Motion is GRANTED
and all claims asserted by plaintiff and codefendant Partnership Concepts Realty
Management, Inc. against Tokai Corporation
are dismissed with prejudice.
Judge Michael J. Hogan
19a
APPENDIX D — ORDER
Appendix
OFDTHE APPELLATE
COURT OF ILLINOIS, FIRST JUDICIAL DISTRICT
DENYING PETITION FOR REHEARING
DATED JUNE 29, 2006
IN THE APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
Nos. 1-04-2609 and
1-04-2736
(consolidated)
HELEN M. SAIA, Individually, and as Special Administrator
of the Estate of Alexis K. Saia, a Deceased Minor,
Plaintiff-Appellant,
v.
SCRIPTO-TOKAI CORPORATION, a California
Corporation, K MART CORPORATION, a Michigan
Corporation, and PARTNERSHIP CONCEPTS REALTY
MANAGEMENT, INC., an Illinois Corporation,
Defendants,
and
TOKAI CORPORATION, a Japanese Corporation,
Defendant-Appellee.
20a
Appendix D
ORDER
Upon consideration of the petition for rehearing of
defendant-appellee,
IT IS HEREBY ORDERED that said petition for
rehearing is DENIED.
s/ Jill K. McNulty
Presiding Justice Jill K. McNulty
s/ John P. Tully
Justice John P. Tully
s/ James Fitzgerald-Smith
Justice James Fitzgerald-Smith
21a
APPENDIX E — Appendix
ORDER OF
E THE SUPREME
COURT OF ILLINOIS DENYING PETITION FOR
LEAVE TO APPEAL DATED NOVEMBER 29, 2006
SUPREME COURT OF ILLINOIS
CLERK OF THE COURT
SUPREME COURT BUILDING
SPRINGFIELD, ILLINOIS 62701
(217) 782-2035
November 29, 2006
Ms. Melissa A. Murphy-Petros
Clausen Miller P.C.
10 South LaSalle St.
Chicago, IL 60603
No. 103165 –
Helen M. Sala, Indv., etc., respondent, v.
Scripto-Tokai Corporation, etc., et al. (Tokai
Corporation, etc., petitioner). Leave to
appeal, Appellate Court, First District.
The Supreme Court today DENIED the petition for leave
to appeal in the above entitled cause.
Kilbride, J., took no part.
The mandate of this Court will issue to the Appellate
Court on January 4, 2007.
22a
APPENDIX F —
RELEVANT
STATUTE
Appendix
F
5/2-209. Act submitting to jurisdiction—Process
§ 2-209. Act submitting to jurisdiction—Process. (a) Any
person, whether or not a citizen or resident of this State, who
in person or through an agent does any of the acts hereinafter
enumerated, thereby submits such person, and, if an
individual, his or her personal representative, to the
jurisdiction of the courts of this State as to any cause of action
arising from the doing of any of such acts:
(I) The transaction of any business within this State;
(2) The commission of a tortious act within this State;
*
*
*
(c) A court may also exercise jurisdiction on any other
basis now or hereafter permitted by the Illinois Constitution
and the Constitution of the United States.
*
*
*
*