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Dreibelbeis v. Daesung Celtic Enersys Co. Ltd.

United States District Court, N.D. Indiana, South Bend Division

June 27, 2018

LEROY DREIBELBEIS, Plaintiff,
v.
DAESUNG CELTIC ENERSYS CO. LTD, CHALLENGER SUPPLY HOLDINGS, INC., and MENARD, INC., Defendants. CHALLENGER SUPPLY HOLDINGS, INC., Cross-Claim Plaintiff,
v.
DAESUNG CELTIC ENERSYS CO. LTD., Cross-Claim Defendant.

          OPINION AND ORDER

          JON E. DEGUILIO JUDGE

         Plaintiff Leroy Dreibelbeis (“Plaintiff”) filed this product liability action alleging that his building was damaged by a fire on January 5, 2015, when his water heater (a Quietside DPW-120A S-Line Condensing Instantaneous Tankless Water Heater) overheated [DE 4]. He claims that damages are due from the following Defendants: Mernard, Inc. (“Menard's”), who sold the water heater; Challenger Supply Holdings, Inc. (“Challenger Supply”), who distributed it; and Daesung Celtic Enersys Co., Ltd. (“Daesung”), who manufactured it. Challenger Supply has filed a cross-claim against Daesung seeking indemnity in the event that Plaintiff prevails [DE 10 at 11-12].

         Daesung seeks dismissal of both claims pursuant to Rule 12(b)(2) for lack of personal jurisdiction; or, in the alternative, pursuant to Rule 12(b)(6) for failing to state a claim. For the reasons stated below, the Court concludes that it lacks jurisdiction over Daesung and declines to address the sufficiency of the claims.

         I. FACTUAL BACKGROUND

         In 2011, Plaintiff purchased a Quietside water heater manufactured by Daesung from a Menard's store located in Mishawaka, Indiana [DE 42-1, Affidavit of Leroy Dreibelbeis]. Plaintiff had the water heater properly installed in a building on his property located in New Carlisle, Indiana. Id. On January 5, 2015, the water heater caught fire which resulted in damage to Plaintiff's real and personal property. Id. Plaintiff later learned that a recall on the water heater had been issued in 2014, [1] due to reports that the product could overheat and posed a fire hazard. Id.

         Quietside, LLC[2] had the right to distribute Daesung's tankless water heaters throughout the United States, Mexico, and Canada, and as the exclusive distributer in the United States, Quietside sent an undisclosed number of water heaters to Menard's stores located in Indiana [DE 42-1 at 7-10; DE 54-1, Affidavit of Challenger Supply's former director]. Given the distribution agreement, Daesung also tasked Quietside with organizing a sales service network throughout the United States by designating dealers, advertising Daesung's products, and displaying products at tradeshows [DE 54-1]. When Daesung initiated the voluntary recall of the water heater in 2014, Daesung hired legal counsel and advisors in the United States at its own expense to facilitate and control the recall. Id. But Daesung had no knowledge of Quietside's distribution networks, the forums targeted for the sale of products, or the locations where the instant product was actually sold [DE 43-1; DE 44-1, Affidavit from the Head of Daesung's Overseas Business Team]; and so, Quietside had to provide Daesung with “a confidential list of all Quietside distributors and retailers of the subject products.” [DE 54-1].

         Daesung is a corporation existing under the laws of the Republic of Korea, where its principal place of business is also located. Id. Daesung affirms that aside from the above facts, it has no contacts with Indiana outside of defending this lawsuit [DE 34-2; DE 43-1; DE 44-1]. Daesung reiterates that neither Plaintiff nor Challenger Supply have offered evidence suggestive of Daesung's having additional contacts with Indiana.

         II. STANDARD OF REVIEW

         Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a party may move to dismiss for lack of personal jurisdiction. Once a defendant moves to dismiss on that basis, “the plaintiff bears the burden of demonstrating the existence of jurisdiction.” Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). To that end, the parties may submit, and a court may consider, materials outside of the pleadings. Id. In ruling on such a motion, a court must first determine whether the plaintiff has made out a prima facie case of personal jurisdiction. Id.; Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). At that stage, a court must “take as true all well-pleaded facts alleged in the complaint and resolve any factual disputes in the affidavits in favor of the plaintiff.” Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010); Purdue, 338 F.3d at 782. If the plaintiff meets that initial burden but there are material factual disputes, the Court must then hold an evidentiary hearing, at which point the plaintiff must prove any facts supporting jurisdiction by a preponderance of the evidence. Hyatt, 302 F.3d at 713.

         III. DISCUSSION

         The Court has personal jurisdiction over a defendant to the same extent a state court in this forum could exercise personal jurisdiction over that defendant. Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 800 (7th Cir. 2014). Here, Indiana's long-arm statute permits its courts to exercise personal jurisdiction to the full extent permitted under federal law. Id.; LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 967 (Ind. 2006) (“Indiana's long-arm provision now extends to the limits of the Constitution.”). Therefore, to determine whether it may exercise jurisdiction over Daesung, the Court must decide “whether ‘the exercise of jurisdiction comports with the limits imposed by federal due process.'” Advanced Tactical, 751 F.3d at 800 (quoting Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014)).

         “The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful ‘contacts, ties, or relations.'” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (quoting Int'l Shoe v. Washington, 326 U.S. 310, 319 (1945)). This requires that “individuals have ‘fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign . . . .'” Id. (quoting Shaffer v. Heitner, 433 U.S. 186, 218 (1977)).

         “Where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, this ‘fair warning' requirement is satisfied if the defendant has ‘purposefully directed' his activities at residents of the forum, Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984), and the litigation results from alleged injuries that ‘arise out of or relate to' those activities, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984).” Burger King, 471 U.S. at 472-73. “The inquiry whether a forum State may assert specific jurisdiction over a nonresident defendant ‘focuses on the relationship among the defendant, the forum, and the litigation.'” Walden, 134 S.Ct. at 1121 (quoting Keeton, 465 U.S. at 775). The “constitutional touchstone” for specific jurisdiction “remains whether the defendant purposefully established ‘minimum contacts' in the forum.” Burger King, 471 U.S. at 474. Furthermore, the relation between the defendant and the forum “must arise out of contacts that the ‘defendant himself ' creates with the forum . . .” Id. (quoting Burger King, 471 U.S. at 475). Contacts between the plaintiff or other third parties and the forum do not satisfy this requirement. Id.; see Advanced Tactical, 751 F.3d at 801.

         A party may also be subject to general jurisdiction, meaning jurisdiction over matters unrelated to the party's connection with the forum State, where the party's “affiliations with the State are so ‘continuous and systematic' as to render them essentially at home in the forum State.” Daimler AG v. Bauman, 134 S.Ct. 746, 754 (2014) (quoting Goodyear Dunlop Ties Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011)). Here, Plaintiff and Challenger Supply focus solely on specific jurisdiction (and in fact, Plaintiff concedes that general jurisdiction is lacking [DE 42 at 4]). Therefore, they make no effort to establish that Daesung is subject to general jurisdiction in Indiana. Instead, the opponents of Daesung's motion to dismiss argue that the Court has specific jurisdiction over Daesung through the stream of commerce theory. See World-Wide Volkswagen Corp. v. ...


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