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Cardona v. Hitachi Koki Co., Ltd.

Superior Court of Delaware

February 5, 2019

Eduardo Diaz Cardona and Wendy Cardona, Plaintiffs,
v.
Hitachi Koki Co., Ltd., Hitachi Koki U.S.A., Ltd., and Schell Brothers, LLC, Defendants.

          Submitted: December 29, 2018

         Upon Defendant Hitachi Koki Co., Ltd. 's Motion to Dismiss for Lack of Personal Jurisdiction: DENIED.

          David A. Boswell, Hudson, Jones, Jaywork & Fisher, LLC, Brian D. Kent (pro hac vice) (argued), Samuel I. Reich (pro hac vice), Laffey, Bucci & Kent, LLP, Attorneys for Plaintiffs.

          Thomas J. Gerard, Bradley D. Remick (pro hac vice) (argued), Marshall Dennehey Warner Coleman & Goggin, Attorneys for Defendant Hitachi Koki Co., Ltd.

          Kenneth M. Doss, Casarino Christman Shalk Ransom & Doss, P.A., Attorney for Defendant Schell Brothers, LLC.

          OPINION

          Sheldon K. Rennie, Judge

         This case arises out of a September 26, 2013 injury. Plaintiff Eduardo Diaz Cardona ("Plaintiff) was using a Hitachi NV83A3 contact trip nail gun in connection with his job responsibilities at a construction site in Sussex County, when the nail gun allegedly malfunctioned and ejected a nail directly into Plaintiffs eye, causing serious and permanent injuries. Plaintiff brought this action against the manufacturer and the distributor of the nail gun, and the general contractor of the construction site, alleging various counts of wrongdoing. Now before the Court is the manufacturer's Motion to Dismiss for Lack of Personal Jurisdiction.

         I. FACTS[1] AND PROCEDURAL BACKGROUND

         Defendant Hitachi Koki Co., Ltd. ("HKK"), the designer and manufacturer of the NV83A3 nail guns, is a Japanese corporation and has its principal place of business in Tokyo, Japan. HKK designs the NV83A3 nail guns in Japan and manufactures them in Taiwan. HKK inspects and tests the nail guns for operational safety, and also creates the safety manual, warning instructions, and labels that are to be provided with the nail guns.

         Defendant Hitachi Koki U.S.A., Ltd. ("HKU") is a Delaware corporation with its principal place of business in Georgia. HKU is a wholly-owned subsidiary of HKK, and was created to sell power tools manufactured by HKK, including the NV83A3 nail guns, in the U.S. market. HKK and HKU have two board directors in common. HKK is the guarantor on HKU's Georgia bank accounts and the property leased for HKU's facility in Georgia.

         HKU is the exclusive U.S. distributor of HKK products. HKU ultimately decides where a HKK product is sold and what product is sold, but HKK is fully aware of HKU's major customers. The Hitachi Koki Group, of which HKK is a part, in a 2016 financial report, stated that it "expanded transactions with a major home center chain, with which it had strengthened its alliance. . . ." The "major home center chain" refers to Lowe's, which sells the NV83A3 nail guns. HKK power tool products are also sold to the general public through the website http://www.hitachipowertools.com/.

         Plaintiff is a Maryland resident who was employed by MDI Contractors, LLC ("MDI") of Georgetown, Delaware, which was one of the subcontractors assigned to perform construction work at the "Osprey Landing" project in Sussex County, Delaware. On September 26, 2013, while working at Osprey Landing, Plaintiff used a Hitachi NV83A3 nail gun, and the nail gun allegedly malfunctioned, ejected a nail directly into Plaintiffs eye, and caused him permanent injuries. The nail gun at issue was supplied to Plaintiff by MDI, but there is no direct evidence in the record showing where or by whom it was purchased.[2]

         On September 24, 2015, Plaintiff filed this action against HKK, HKU, and Osprey Landing's general contractor, Schell Brothers, LLC.[3] The claims against HKK and HKU include negligence, breach of express and implied warranties, and breach of various consumer protection statutes. HKK moved to dismiss the case for lack of personal jurisdiction under Superior Court Civil Rule 12(b)(2).[4] The Court denied HKK's motion without prejudice, and allowed the parties to conduct jurisdictional discovery.[5] After the jurisdictional discovery was completed, HKK filed a Renewed Motion to Dismiss.[6] On September 28, 2017, the Court appointed a Special Master to rule on HKK's Renewed Motion to Dismiss and some related discovery issues. On July 26, 2018, the Special Master issued his Report and Recommendations, finding that the Court has personal jurisdiction over HKK. Both parties filed Exceptions to the Report. On December 21, 2018, with leave of the Court, HKK filed a supplemental brief in support of its Exceptions, [7] to which Plaintiff responded on December 29, 2018.[8] After consideration of the Special Master's Report, the parties' Exceptions and Responses thereto, decisional law, and the entire record in this case, the Court now DENIES HKK's Renewed Motion to Dismiss for Lack of Personal Jurisdiction.

         II. STANDARD OF REVIEW

         Superior Court Civil Rule 122 provides that a Special Master's report is subject to de novo review by the Court.[9]

         In considering a motion to dismiss under Superior Court Civil Rule 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden to prove a non-frivolous basis for the Court's assertion of jurisdiction.[10] The plaintiff satisfies this burden by "making a prima facie showing that jurisdiction is conferred by statute."[11] The facts are interpreted in a light most favorable to the plaintiff.[12]

         III. LEGAL ANALYSIS

         In determining the issue of personal jurisdiction over a nonresident, Delaware courts apply a two-step analysis. First, the Court must determine whether jurisdiction is appropriate under Delaware's long-arm statute. Additionally, the Court evaluates whether asserting jurisdiction would comport with the Due Process Clause of the United States Constitution.[13] These two tests are independent.[14]

         A. Long-Arm Statute

         Delaware's long-arm statute, 10 Del. C. §3104(c), allows the Court to exercise jurisdiction over a nonresident defendant when that person:

(1) Transacts any business or performs any character of work or service in the State;
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission in this State;
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State; .. ., [15]

         Delaware's long-arm statute is broadly construed to confer jurisdiction "to the maximum extent possible under the Due Process Clause."[16]

         In line with modern in personam jurisdiction ideologies, [17] §3104(c) has been divided into two categories: general and specific jurisdiction.[18] Sections 3 l04(c)(1)-(3) have been deemed to be specific jurisdiction provisions.[19] Specific jurisdiction is at issue only when a plaintiffs claims arise out of or relates to the defendant's contacts with Delaware.[20] Section 3104(c)(4), on the other hand, is deemed to confer general jurisdiction.[21] General jurisdiction does not require that the plaintiffs claims relate to the defendant's contacts with the forum, but the defendant's affiliations with the forum must be "so continuous and systematic as to render it essentially at home" in the forum state.[22]

         In applying the provisions of the Delaware long-arm statute, Delaware courts have developed a concept known as "dual jurisdiction," which arises from a combination of §3104(c)(1) and (c)(4). This term was first referenced by the Delaware Supreme Court in LaNuova D &B, S.p.A. v. Bowe Co., in dictum:

It is conceivable that a tort claim could enjoy a dual jurisdiction basis under (c)(1) and (c)(4) if the indicia of activity set forth under (c)(4) were sufficiently extensive to reach the transactional level of (c)(1) and there was a nexus between the tort claim and transaction of business or performance of work.[23]

         The "dual jurisdiction" concept was thereafter adopted and applied by the Delaware Superior Court in Boone v. Oy Partek Ab, [24] as a basis to confer jurisdiction over a foreign manufacturer where its contact with Delaware stems from an allegedly defective product that was introduced into and caused tortious injury in Delaware.[25]

         In Boone, a Finland-based asbestos company, Partek, contracted with a New York firm, Huxley, giving Huxley the exclusive right to sell Partek's asbestos in the U.S.[26] Huxley purchased asbestos from Partek, already bagged and labeled, F.O.B. Helsinki.[27] Huxley was responsible for finding customers for Partek's asbestos and any inquiries made to Partek from the U.S. buyers were turned over to Huxley.[28] The Court found that, although none of the 3104(c) provisions applied in that case, jurisdiction over Partek was still appropriate under the "dual jurisdiction" doctrine. To support its finding of jurisdiction, the Court focused on the goal of the long-arm statute, i.e., providing a means of redress to recover from nonresident defendants.[29]The Court also adopted the "stream of commerce" theory, [30] which is typically applied as part of the Due Process analysis to jurisdiction, and found that this theory can independently satisfy the first step of the jurisdictional analysis and confer jurisdiction under §3104.[31] While acknowledging that the "stream of commerce" theory does not fit neatly into any of the 3104(c) categories, the Court in Boone found that LaNuova's creation of the "dual jurisdiction" concept presented a fitting solution to encompass the intricacies of the "stream of commerce" theory and included it as part of the analysis of the Delaware long-arm statute.[32]

         Further, the Court in Boone held that, to satisfy "dual jurisdiction", § 3104(c)(1) and (c)(4) should not be "overemphasize[d]," as it is not important that "the indicia of activity under § 3104(c)(4) rise to a level of 'general presence'" or that the defendant manufacturer itself acts in Delaware.[33] Rather, the Court held that "dual jurisdiction" exists as long as (1) the defendant manufacturer demonstrates "an intent or purpose to serve the Delaware market with its product," and (2) that intent or purpose results in the introduction of the product into Delaware and ultimately causes the plaintiffs injury.[34] The Court found that there was an intent on the part of Partek to serve the Delaware market, based on the fact that Partek engaged Huxley as its exclusive distributor and solicited business from the country as a whole, including Delaware.[35] The Court also found that, as a result of this solicitation, Partek shipped up to 50 tons of asbestos to Delaware per month and earned hundreds of thousands of dollars from its sales, and the plaintiffs injury arose out of exposure to the asbestos sold by Partek.[36] Thus, Partek was found to be subject to the jurisdiction of this Court.

         Plaintiff argues that this case fits into Boone's "dual jurisdiction" scenario. The Court agrees. The facts here are very similar to those in Boone. HKK set up HKU, a Delaware corporation, as its exclusive U.S. distributor, for the purpose of selling its products in the U.S. market, including Delaware. Under Boone, this demonstrates HKK's intent to serve Delaware. Although the factual record does not contain any specific sales data for the NV83A3 nail guns, the fact that they are mass-marketed, mass-produced consumer products offered for sale through Lowe's, when viewed in a light most favorable to Plaintiff, supports a strong inference that significant amounts of NV83A3 nail guns have been sold in each state, including Delaware. And it is undisputed that Plaintiff was injured by a NV83A3 nail gun used in Delaware as a result of these sales. Hence, the facts in this case satisfy the "dual jurisdiction" requirements established in Boone. The first prong of the jurisdiction analysis, the long-arm statute, is met.

         B. Due Process Clause

         The next step is to determine whether this case passes constitutional Due Process mustor. Due Process requires that the defendant has sufficient "minimum contacts" with the forum state, such that subjecting him to the forum's jurisdiction "does not offend ...


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