Parry v. Ernst Home Center Corporation and “Additional Conduct”

Justice O’Connor, joined by three other justices, in Asahi, wrote that “[a]dditional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State” in elaborating a “stream of commerce plus” theory of personal jurisdiction. She went on to provide an illustrative list of examples of such additional conduct, which included “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 a sales agent in the forum State.”

The Supreme Court of Utah considered these “additional factors” when analyzing a jurisdictional defense in Parry v. Ernst Home Center Corporation (779 P.2d 659). In Parry, two Japanese defendants resisted the exercise of personal jurisdiction in a case stemming from an injury to the plaintiff in Utah from a maul manufactured by one defendant (Hirota Tekko K.K.) and exported to the U.S. by the other (Okada Hardware).

The facts of the case are these:

“In January 1980, plaintiff was injured in Utah while splitting logs with a WECO maul which had been manufactured by Hirota Tekko K.K., a Japanese manufacturer. Hirota had sold the maul to Okada Hardware in Japan for export to the United States. Okada exported it to Mansour, a California corporation, who then sold it to Pacific Marine Schwabacher, its regional distributor. Schwabacher distributed and sold the mauls to retailers throughout the west coast and mountain area, including defendants Ernst Home Center Corporation and Pay N' Save. The Ernst Home Center in Twin Falls, Idaho, sold this particular maul to Linda Thayne in December, 1979. She then gave the maul to her father in Utah. Plaintiff borrowed it from him and was injured while using it.”

In terms of links between the Japanese defendants and the U.S., the court found that “[t]he Japanese defendants had been informed by Mansour that the maul would be sold in the western United States. Mansour had submitted numerous orders to Okada over an extended period of time prior to plaintiff's injury. These orders included the purchase and importation of WECO products, including chopping mauls identical to the one used by plaintiff. During the transaction of business with Okada and Hirota, Mansour and its representatives traveled to Japan and Japanese representatives from Hirota and Okada traveled to the United States to discuss the sale and distribution of products such as the WECO maul. On these occasions, Mansour discussed the fact that these products would be distributed for retail sales throughout the western United States and possibly in any state in the United States. There was no evidence proffered that either Hirota or Okada directly sold or advertised any of their products in Utah. Nevertheless, Ernst and Pay N' Save sold the same brand and model of chopping maul in their retail outlets throughout Utah on an intermittent basis.” Based on these facts, the trial court found the exercise of jurisdiction over the defendants improper.

After reviewing the “murky” state of personal jurisdiction analysis, the court ultimately follows O’Connor’s “stream of commerce plus” theory and upheld the trial court’s determination based on the absence of any “additional conduct” targeting the forum state:

“Of the following examples of “additional conduct” outlined in Asahi, Hirota and Okada had not engaged in even one. The record does not show special designing for Utah's market, advertising in Utah, establishing channels for providing regular advice to customers in Utah, or marketing the product through a distributor who has agreed to act as a sales agent in Utah. Parry and Mansour contend that the WECO maul was “advertise[d] in the forum state.” Their reply brief stated at page 1 that of the eleven findings of fact, the “finding that the maul in question was never advertised or sold in the State of Utah ... was clearly in error.” The only evidence about advertising in the record is Ernst's and Pay N' Save's answers to interrogatories in answer No. 9, which stated, “The product was available for sale at all Ernst Home Center locations in Utah.”

The record does not reveal any further knowledge or intent by Hirota and Okada to specifically sell the product in Utah or in any other given state. True, the Japanese defendants have not placed any restrictions upon the sale of their products in any particular section of the United States. But an intentional and knowing distribution of the product in the western United States is not necessarily sufficient to satisfy the “minimum contacts” requirement. Further, Hirota and Okada have their principal place of business in Japan; neither has an office in Utah. They have no sales representatives or other agents, no bank account, and no personal property in Utah. They do not own, lease, or rent real property in Utah. Hirota and Okada have not solicited, directly or indirectly, the sale of any of its products in Utah. They have not provided brochures or sent any sales representatives to Utah. They do not render services in Utah and do not give advice to anyone in Utah with regard to the WECO maul. Without a showing of “additional conduct,” we are unable to find that the eventual sale of a product in Utah justifies personal jurisdiction.”

The “Unique Burden” on Foreign Defendants

Although the Court in Asahi wrote that “[t]he unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders,” there has been a tendency by courts to recognize the variability of that “unique burden” given the actual physical and cultural distances between countries and legal systems.

For example, the D. Connecticut District Court in Hardy v. Ford Motor Car, 20 F.Supp.2d 339 (1998) found dismissal of a case against a Korean seat belt supplier (Duck Boo) warranted on the basis of reasonableness and “fair play and substantial justice” given “the significant distance between Connecticut and Korea … [and] the existence of dissimilar legal systems.”

In Theunissen v. Matthews, 935 F.2d 1454 (1991), however, the U.S. Court of Appeals, Sixth Circuit reversed a dismissal for lack of personal jurisdiction over Mathews, a Canadian lumber yard operator, finding the exercise of jurisdiction reasonable despite the fact that the defendant was foreign: “Unlike in Asahi Metal, the burdens on Matthews would be comparatively slight in this case. Windsor, Ontario is only approximately ten miles from Detroit. Moreover, the judicial systems of Canada and the United States are rooted in the same common law traditions.”