When a wrong is done to your business, to you or to someone you love, it feels like it should be straightforward to get fair legal compensation for the injury or financial loss. Typically, if a business entity or person caused something bad to happen, commencing with commercial litigation or a personal injury or other civil lawsuit is usually an effective way to bring the offending party to the table to resolve the dispute.
But sometimes even when right and wrong seem clear, the law that applies can be so complicated that what seems like it should be a simple case of liability turns into a complex legal maze.
When this happens, an experienced, skilled litigation attorney can be the key. Sometimes a layperson cannot imagine the legal landmines that can lie between the commercial or personal injury and the ultimate legal remedy. And one of the issues that increasingly arises is the simple question of whether the defendant - especially one from another state or country - can be sued in the plaintiff's court of choice, usually one where the plaintiff resides.
There can be no question that international trade and commerce has resulted in increasing interconnectedness between businesses and people at home and abroad. As a result of this globalization, more and more disputes arise involving foreign companies. One of the initial determinations legal counsel must make is whether a foreign company can be subject to the jurisdiction of U.S. courts. Federal and state courts have increasingly recognized their jurisdiction over foreign companies in a number of settings.
A recent case is a good example.
The Willemsen Case
Enter 60-year-old Karlene Willemsen, a victim of multiple sclerosis who died in a 2008 fire in her Portland home. The fire allegedly sparked when the defective battery in her motorized wheelchair ignited while she was in bed. Her family filed an $8.5 million wrongful death and product liability lawsuit in Oregon state court against Invacare Corporation, the Ohio wheelchair manufacturer, and against other entitles with roles in the chair's distribution chain or that made component parts.
The plaintiffs ran into a legal wall called "personal jurisdiction" that took more than three years to scale. Personal jurisdiction asks the question whether it is fair for a party to be subject to suit in a particular state considering that party's level of contact there.
The particular defendant in Willemsen that manufactured the battery charger in question is a Taiwanese company, CTE Tech Corp. The plaintiffs said that the charger was defective or that CTE was negligent in its "design, inspect[ion], test[ing]" or production of the charger.
Rather than defending against these factual charges about the battery, CTE asserted that the Oregon state court did not have personal jurisdiction over the company because it had not personally done business in Oregon. Rather, it had contracted with Invacare in Ohio to supply the chair batteries and subsequently Invacare sold the chairs nationwide, including in Oregon. Of the wheelchairs sold in Oregon, more than 1,100 had CTE battery chargers.
All the Way to the U.S. Supreme Court
The fight over whether CTE could be subjected to a suit in Oregon took a circuitous route that ultimately ended up before the U.S. Supreme Court. Rather than deciding the issue directly, the U.S. Supreme Court sent the case back to the Oregon Supreme Court to reconsider the personal jurisdiction issue in light of another recent U.S. Supreme Court case called J. McIntyre Machinery, Ltd. V. Nicastro.
The Oregon Supreme Court issued its complicated, 20-page decision on July 19, 2012, in which it said that after looking at Nicastro, it would allow the Willemsens to proceed with their lawsuit against CTE in the Oregon trial court.
The Nicastro Holding
In Nicastro, a British company made industrial machines used in recycling and sold them in the U.S through a national distributor that sold one of the British machines in New Jersey. That machine allegedly injured the plaintiff, who sued the British manufacturer in New Jersey state court.
Even articulating the rule of law that Nicastro stands for was no easy feat for the Oregon Supreme Court because the U.S. Supreme Court decision was a plurality in which there was no majority opinion. While six justices could agree that New Jersey did not have personal jurisdiction over the British company, their reasoning was different as laid out in two different written opinions.
After a complex analysis of how to discern the real holding of the Nicastro plurality, the Oregon Supreme Court held that the Nicastro test for personal jurisdiction over an out-of-state defendant in this commercial litigation context is whether the potential party has a "regular flow" or "regular course" of sales in the forum state, or whether there is "something more" specifically related to that state like focused marketing or design.
Applying this reasoning to Willemsen, the Oregon Supreme Court held that the 1,102 wheelchairs with CTE batteries sold in Oregon established a "regular flow or regular course of sales" sufficient to establish personal jurisdiction over CTE. Considering the significant number of chairs with CTE battery chargers sold in Oregon, the incident that caused the fatal fire could not be called "isolated" and considering this level of contact with Oregon, it is fair for CTE to be sued there. In fact, the state has a "strong interest" in providing a legal forum for redress of injuries like Willemsen's death.
So it took the Willemsen family more than three years to establish the right to sue this foreign company, CTE, in Oregon court for the death of their mother. Now they will be able to present their case, and CTE will be able to present its defense, in the state in which the death occurred.
Although this case involves a product liability claim, the court's holding is important in many other contexts involving potential claims against foreign corporations. If you or your company has a claim involving a foreign company or individuals, consult with a knowledgeable litigation lawyer early on to develop a strategy for obtaining jurisdiction over that company in state or federal court.