Addressing personal jurisdiction over a foreign defendant, the US Court of Appeals for the Federal Circuit found that concerted actions occurring in a foreign jurisdiction but directed at Delaware were sufficient minimum contacts to satisfy due process under the Delaware long arm statute.Polar Electro Oy v. Suunto Oy, Case No. 15-1930 (Fed. Cir., July 20, 2016) (Lourie, J).
Polar sued Suunto and its sister company Amer Sports Winter & Outdoor (ASWO) in Delaware. Suunto is a Finnish company with a principal place of business and manufacturing facilities in Finland. ASWO is a Delaware corporation with a principal place of business in Utah. ASWO distributes Suunto’s products in the United States. According to the terms of the agreement, ASWO pays for shipping of the product and for title passes from Suunto to ASWO in Finland. Prior to the filing of the complaint, at least 94 accused products had been shipped to at least three retail stores in Delaware.
Following jurisdictional discovery, the district court granted Suunto’s motion to dismiss, finding that Suunto was not subject to specific jurisdiction in Delaware because it did not directly sell the accused products in Delaware. The court found that Suunto lacked the minimum contacts necessary for due process. The district court also found that Delaware’s long-arm statute (§ 3104(c) (4)) was satisfied under a “dual jurisdiction” theory, since (i) Suunto intended to serve the Delaware market and (ii) that intent resulted in the introduction of Suunto products into Delaware and the cause of action arose from injuries caused by the products and that. The dual jurisdiction theory does not require a showing of general jurisdiction or full satisfaction of the Delaware long-arm statute, but only a showing that the defendant had the intent of serving the Delaware market and that, as a consequence, product was introduced into Delaware. However, notwithstanding satisfaction of the Delaware long-arm statute, given Suunto’s lack of sufficient minimum contacts, the district court dismissed Suunto from the action. Polar appealed.
On appeal, the Federal Circuit reversed, explaining that the plaintiff need only make a prima facie of personal jurisdiction to avoid dismissal. The Court examined and applied the Delaware long-arm statute in order to determine whether exercising jurisdiction complied with due process. In doing so, the Federal Circuit affirmed the district court’s use of a dual jurisdiction theory to decide the personal jurisdiction issue and determined that Suunto’s shipping of products to Delaware retailers was sufficient to sustain specific jurisdiction in Delaware. Specifically, the Court found that Suunto’s actions indicated an intent to serve not only the US market generally, but the Delaware market specifically. The Court, applying its 1994 Beverly Hills Fan precedent (and noting that the jurisdiction facts of this case would satisfy even the most stringent of the Supreme Court standards as set forth in Asahi (1987) and McIntyre (2011)), found that Suunto’s contacts were sufficient, because “although ASWO provided the destination address, took title to the goods in Finland, and directed and paid for shipping, it was Suunto, not ASWO, who physically fulfilled the orders, packaged the products and prepared the shipments in Finland.” Suunto did not sell its products to an independent distributor, but was “acting in consort with ASWO” to ship accused products to Delaware.
The Federal Circuit remanded the case for a determination of whether, given the showing of purposeful minimum contacts, exercising jurisdiction would be reasonable and fair, noting that on remand Suunto bears the burden of proving unreasonableness.
Practice Note: This case has made it increasingly difficult to shield a foreign supplier from jurisdiction where it acts in concert with its US affiliate.