Since the United States Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014) defendants, especially those defending product liability claims, have increasingly pursued motions to dismiss on personal jurisdiction grounds. A Connecticut superior court recently denied such a motion and held that a Texas-based manufacturing company was subject to personal jurisdiction in Connecticut, even though the defendant’s sales into Connecticut were less than .01% of total company sales, and the defendant did not sell to plaintiff’s workplace until after he worked there. Daimler held that a specific jurisdiction is limited to where the defendant’s in-state activities are continuous and systematic, and give rise to the liabilities sued on, the Connecticut decision, suggests that at least one Connecticut superior court does not consider the Daimler as greatly limiting the reach of the state’s long-arm statute.
The Honorable Judge Barbara Bellis of the Connecticut Superior Court in the Judicial District of Fairfield at Bridgeport decided Rice v. American Talc Co., No. FBT CV-15-6053658-S (Sept. 7, 2017), applying Connecticut’s broad long-arm statute:
Every foreign corporation shall be subject to suit in this state, … on any cause of action arising as follows: … (3) out of the production, manufacture or distribution of goods by such corporation with the reasonable expectation that such goods are to be used or consumed in this state and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed or sold or whether or not through the medium of independent contractors or dealers; …
Conn. Gen. Stat. § 33-929 (f)(3).
The plaintiff argued that the defendant Texas company was subject to the court’s jurisdiction under Conn. Gen. Stat. § 33-929 (f)(3) because plaintiff’s decedent was allegedly exposed to defendant’s asbestos-containing talc while working at an American Standard plant in Connecticut. Plaintiff further argued that the defendant had a reasonable expectation that its products would be used in the State of Connecticut. Defendant was a producer of talc, American Standard allegedly used that talc in the manufacturing process, and American Standard was one of the defendant’s customers. Additionally, plaintiff proffered that the defendant purposefully sought out the Connecticut market, and shipped products directly to consumers there.
Defendant, on the other hand, argued that the plaintiff’s decedent’s injuries could not have arisen out of any transaction by the defendant in Connecticut because the defendant did not acquire rights to mine allegedly asbestos-containing talc until three years after plaintiff’s decedent stopped working at the American Standard plant. Defendant manufacturer also argued that it did not have the minimum contacts in the forum state to justify jurisdiction because it never had offices, employees, or sales agents in Connecticut, had no sales to any company in the forum state after the 1970s and the few sales that it did have into Connecticut were less than .01% of its sales in any given year.
The court used a two-part test to consider the defendant’s challenge to personal jurisdiction via motion to dismiss. First, the court determined that the state’s long-arm statute authorizes jurisdiction over the defendant because the “arising… out of” language does not require a plaintiff’s cause of action and defendant’s contacts with the forum state to be causally connected. The court further agreed that a plaintiff does not need to show that the defendant solicited business in the state, only that the defendant could reasonably anticipate being sued by some person who had been solicited in Connecticut.
In Rice, the plaintiff submitted a deposition transcript stating that, when the defendant was selling products to a distributor, defendant also knew who the distributor’s customer was. Sales records established that the defendant sent a sample shipment of twenty bags of talc to Connecticut in November 1972, and sales invoices showed numerous shipments to Connecticut between 1969 and 1976. Based on this evidence, the court concluded that it was reasonably foreseeable that the defendant could be sued in Connecticut.
Under part two of the test, the court determined that whether the exercise of jurisdiction over the defendant under Connecticut’s long arm statute did not violate Constitutional principles of due process. Daimler held that a state could exercise personal jurisdiction over an out-of-state defendant if the defendant had minimum contacts with the forum state such that the suit does not offend the “traditional notions of fair play and substantial justice.” Rice found that “minimum contacts” was satisfied because the defendant shipped products to Connecticut (even if it was a small percentage of sales) and was aware of the ship-to-point when sending products to distributors. Moreover, the court reasoned that while the defendant shipped products to Connecticut after plaintiff’s decedent stopped working at the American Standard plant, the defendant shipped other products to Connecticut while the plaintiff’s decedent was allegedly exposed to defendant’s asbestos-containing products working as a painter.
Rice found that jurisdiction accorded with “fair play and substantial justice,” based on five factors: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of justice of the forum state in adjudicating the case; (3) the plaintiff’s interests in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.
Rice weighed factor (1) in favor of the defendant, stating that travel costs could be a burden because the defendant is incorporated in Texas and would have to defend a suit in Connecticut. According to the court, however, factors (2) through (5) all weighed in favor of the plaintiff. Connecticut has a strong interest in adjudicating personal injury actions involving its own citizens where the claimed injury was caused in part by a defendant who purposefully distributed products in the state. Furthermore, the plaintiff is a resident of the forum state and has an interest in obtaining convenient and effective relief in the state. The court decided that adjudicating in Connecticut would also be the most efficient use of judicial resources because the plaintiff has sued multiple defendants over a single and indivisible injury (mesothelioma). Requiring the plaintiff to maintain multiple actions in different jurisdictions would not only be inefficient, but impose a greater burden on the plaintiff than the burden of subjecting the defendant to suit in Connecticut.
The Rice decision displays that shipping products to Connecticut, even only a small fraction of a company’s sales, may be enough to reasonably foresee being sued in Connecticut. This can be enough to subject a foreign company to specific jurisdiction in Connecticut, even if the dates of sales do not overlap with the timing of the alleged injury. Additionally, solely being incorporated in a distant state and incurring travel costs during trial likely will not be sufficient to establish that the traditional notions of fair play and substantial justice have been violated.
As a trial court ruling, the Rice decision is not binding precedent. But if it is followed by other Connecticut courts, the result will be s a heavy burden on foreign corporations seeking to apply Daimler to limit Connecticut jurisdiction. There is no word yet on whether an appeal will be filed.