United States Court of Appeals For the First Circuit
Nos. 18-1550 18-1551
STEPHEN D. KNOX; JEAN KNOX,
Plaintiffs, Appellants,
v.
METALFORMING, INC.,
Defendant, Appellant,
SCHECHTL MASCHINENBAU GMBH,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Lynch, Stahl, and Barron, Circuit Judges.
Benjamin R. Zimmermann, with whom Stacey L. Pietrowicz and Sugarman and Sugarman, P.C. were on brief, for Stephen and Jean Knox. Javier F. Flores, with whom Eric V. Skelly, Thaddeus M. Lenkiewicz, and Manning Gross & Massenburg LLP, were on brief, for MetalForming, Inc. Frederick W. Reif, with whom Marie E. Chafe, Cornell & Gollub, Debra Tama, and Wilson Elser Moskowitz Edelman & Dicker, LLP, were on brief, for Schechtl Maschinenbau GmbH. January 30, 2019 LYNCH, Circuit Judge. Stephen Knox's hand was badly
injured at his work at Cape Cod Copper (CCC) in October 2016 when
he operated a machine that was manufactured by defendant Schechtl
Maschinenbau GmbH, a German company. The machine had been sold to
CCC by defendant MetalForming, Inc., an American company located
in Georgia and Schechtl's U.S. distributor.
The question on appeal is whether there is personal
jurisdiction over Schechtl, named as a defendant by Knox and as a
cross-claim defendant by MetalForming. The district court
dismissed the claims against Schechtl, finding that Schechtl had
not purposefully availed itself of the privilege of doing business
in Massachusetts. Knox v. MetalForming, Inc., 303 F. Supp. 3d
179, 184 (D. Mass. 2018).
We reverse.
I.
A. Background
The district court did not permit jurisdictional
discovery. Id. at 187. The following facts are undisputed.
In October 2016, Stephen D. Knox, plaintiff here along
with his wife, Jean, was injured while using a Schechtl MAX 310,1
a motor-driven metal-bending machine. The injury occurred at CCC,
1 Although some materials refer to the machine as a "MAX3100 FOLDER," the parties refer to it as a "MAX 310," and we will do the same.
- 3 - Knox's place of employment, located in Lakeville, Massachusetts.
When Knox inadvertently hit the foot pedal of CCC's MAX 310, the
machine activated, crushing his left hand.
Schechtl, the manufacturer of the MAX 310, is
headquartered in Edling, Germany and maintains no operations in
the United States. The company's marketing materials say that
Schechtl manufactures the "most popular architectural sheet metal
folders in the world."
Schechtl sells its machines to United States customers
through MetalForming, a separate and independently owned U.S.
distribution company. Schechtl's distribution agreement ("the
agreement") with MetalForming gives MetalForming the exclusive
right to distribute Schechtl's products in the "Contract
Territory," which comprises Canada, the United States, and Mexico.
The agreement outlines the procedure for selling
Schechtl's machinery. The purchasing end user ("the purchaser")
places an order with MetalForming, which in turn acquires the
machine from Schechtl. MetalForming then sends a purchase order,
naming the purchaser, to Schechtl in Germany. Under the agreement,
MetalForming must include "technical and other data" in the
purchase order, because that information is "of importance for the
ordered product, the supply contract, and its performance."
Schechtl then chooses whether to accept the purchase
order. If it does accept, it issues a written order confirmation,
- 4 - which "govern[s] the product to be delivered, its technical
qualities, the delivery price, the place of delivery, the time of
delivery as well as all other relevant contractual provisions."
Schechtl then manufactures the machine to the
purchaser's specifications. The agreement provides that Schechtl
"reserves the right, in the exercise of its sole discretion, to
discontinue the manufacture or distribution of any Product without
incurring any obligation to [MetalForming]."
When the machine is ready, Schechtl delivers it to a
"freight forwarder or other transport agency" in Germany, at which
point ownership passes to MetalForming. The record does not detail
the ordinary shipment process after that point, but, as we describe
below, it does show how the MAX 310 that injured Knox came to CCC.
Under the agreement, MetalForming is responsible for
installation at the purchaser's site and for training the
purchaser's personnel in the proper use of the machine. The
agreement does, however, provide that it may "become necessary
that installation work be conducted under the direction of a"
Schechtl technician. And there is somewhat different information
as to training contained in the information manual, as noted below.
The agreement also requires that MetalForming "provide
any and all warranty services for the" Schechtl products. Schechtl
provides a one-year warranty "to the end users for all of its
machines, machine parts, tools, spare parts, and accessories."
- 5 - MetalForming must also, under the agreement, "pass along
to customers information received from [Schechtl]" regarding the
products and their proper use. This information is packaged in
with each machine when it is delivered to the purchaser. The
enclosed material includes a declaration that the machine had been
"developed, designed and manufactured in compliance with"
applicable European safety directives. It also includes
instruction manuals and safety instructions for each machine.
The instruction manual includes an "Instruction for
Inquiries and Spare Part Orders," which directs purchasers to
contact Schechtl (and not MetalForming) for inquiries and for
additional machine parts. A later troubleshooting section of that
manual also instructs that operators experiencing a problem
should, "[i]f it is not possible to correct the malfunction with
the aid of the following tables, contact the Schechtl Maschinenbau
GmbH Service department." It does not instruct the
operator/purchaser to contact MetalForming. The manual also
offers that "[t]he operating company may receive extensive machine
training by Schechtl Maschinenbau GmbH upon request . . . at
[Schechtl's] facilities or at the operating company's facilities."
There is no evidence as to whether any Massachusetts purchaser
made such a request.
The materials provided to the purchasers of Schechtl
machines contain Schechtl's direct contact information, including
- 6 - its phone and fax numbers and its mail and email addresses.
Schechtl also operates a website that instructs purchasers of its
machines to contact Schechtl directly for frequently asked
questions, sales, parts, and other information relating to its
machines. See Schechtl, http://www.schechtl.biz/index_e.htm (last
visited Jan. 24, 2019).
Schechtl has provided MetalForming with advertising
materials to market Schechtl products in the United States.
MetalForming has promoted Schechtl machines in national trade
publications and at industry trade shows. There is no record
evidence as to the Massachusetts recipients of those trade
publications. And while the record shows that Schechtl
representatives attended several trade shows in the United States
with MetalForming, there is no evidence that any of those shows
were in Massachusetts.
Between 2000 and September 2017, MetalForming sold 2,639
Schechtl sheet metal machines throughout the United States, at a
value of just over $97 million. Between July 2001 and September
2017, MetalForming sold to purchasers in Massachusetts forty-five
Schechtl machines and 234 Schechtl parts, at a value of nearly
$1.5 million (about $1.3 million for the machines and $176,752 for
the parts). Schechtl's Massachusetts machine sales appear to
constitute 1.35% of its United States machine sales. The record
does not reveal Schechtl's total parts sales in the U.S.
- 7 - Schechtl sold the MAX 310 which injured Knox to
MetalForming in April 2001. MetalForming took delivery in Georgia.
In August, four months after the initial sale, MetalForming shipped
the machine to CCC, with CCC taking ownership of the machine in
Georgia. The respective purchase orders show that MetalForming
purchased the machine from Schechtl for $25,830 and sold it to CCC
for $38,950. The purchase order from MetalForming to Schechtl
identified the purchaser as CCC but did not give CCC's location.
The purchase order from MetalForming to CCC shows that the machine
came with a one-year Schechtl warranty and that the price included
a "Schechtl Installation Charge" and a "Schechtl Freight Charge"
to the purchaser, but no party explains what these last two terms
mean or who receives the payment.
B. Procedural History
The Knoxes sued both Schechtl and MetalForming in
Massachusetts state court. They alleged negligence, breach of
warranty, loss of consortium, and violation of the Massachusetts
consumer protection statute, Mass. Gen. Laws ch. 93A. MetalForming
removed the case to Massachusetts federal district court and filed
crossclaims against Schechtl for indemnification, contribution,
and breach of contract. Schechtl moved to dismiss the claims
against it for lack of personal jurisdiction. Both the Knoxes and
MetalForming opposed Schechtl's motion.
- 8 - The district court, after finding that the terms of
Massachusetts's long-arm statute were "easily . . . satisfied,"
Knox, 303 F. Supp. 3d at 183, nonetheless granted Schechtl's motion
to dismiss, id. at 188. The court reasoned that, even though
"Schechtl ha[d] derived . . . 'substantial revenue' from
MetalForming's sales of Schechtl equipment to Massachusetts
customers," id. at 186, Schechtl had not purposefully availed
itself of the privilege of doing business in Massachusetts, id. at
187. The court added that there was "[n]o Massachusetts-specific
'plus' factor," like "'special state-related design, advertising,
advice, marketing,' etc." Id. at 186 (quoting J. McIntyre Mach.,
Ltd. v. Nicastro, 564 U.S. 873, 889 (2011) (Breyer, J.,
concurring)). The court did not mention either the instructions
or the warranties that Schechtl provided to the purchasers in
Massachusetts.
This appeal followed.
II.
The district court held that MetalForming had not made
a prima facie showing of personal jurisdiction. See id. at 184.
On prima facie review, the plaintiffs' burden is to proffer
evidence "sufficient to support findings of all facts essential to
personal jurisdiction" without relying on unsupported allegations.
A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016).
We construe these facts "in the light most congenial to the
- 9 - plaintiff's jurisdictional claim." Mass. Sch. of Law at Andover,
Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998). "Our
review is de novo." LP Sols. LLC v. Duchossois, 907 F.3d 95, 102
(1st Cir. 2018).
In a diversity jurisdiction case like this one, "a
plaintiff must satisfy both the forum state's long-arm statute and
the Due Process Clause of the Fourteenth Amendment." C.W. Downer
& Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir.
2014). Compliance with the terms of the Massachusetts long-arm
statute is not contested here. Schechtl proceeds directly to the
federal constitutional analysis; we will do so as well.
For the exercise of personal jurisdiction to be
constitutional, a defendant must have "certain minimum contacts
with [the forum state] such that the maintenance of the suit does
not offend 'traditional notions of fair play and substantial
justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The
constitutional "inquiry is highly 'fact-specific.'" PREP Tours,
Inc. v. Am. Youth Soccer Org., No. 17-1223, 2019 WL 126221, at *4
(1st Cir. Jan. 8, 2019) (quoting United Elec., Radio & Mach.
Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st
Cir. 1992)). Importantly, the "test is 'not susceptible of
mechanical application; rather, the facts of each case must be
- 10 - weighed.'" Id. (quoting Kulko v. Superior Ct. of Cal., 436 U.S.
84, 92 (1978)).
The Knoxes and MetalForming have asserted specific
personal jurisdiction over Schechtl, so the constitutional
analysis here has three components: relatedness, purposeful
availment, and reasonableness. Plixer Int'l, Inc. v. Scrutinizer
GmbH, 905 F.3d 1, 7 (1st Cir. 2018). That is, the plaintiffs must
show that (1) their claims directly arise out of or relate to the
defendant's forum activities; (2) the defendant's forum contacts
represent a purposeful availment of the privilege of conducting
activities in that forum, thus invoking the benefits and
protections of the forum's laws and rendering the defendant's
involuntary presence in the forum's courts foreseeable; and
(3) the exercise of jurisdiction is reasonable. Id. The Knoxes
and MetalForming must meet all three requirements to establish
personal jurisdiction. Id. We hold that they have.
The district court reached only the issue of purposeful
availment. But at oral argument Schechtl's counsel conceded that
the other two requirements are met. We briefly explain below why
we agree and address the main issue of purposeful availment.
A. Relatedness
To show relatedness, the Knoxes and MetalForming must
demonstrate that their "cause of action either arises directly out
of, or is related to, the defendant's forum-based contacts."
- 11 - Harlow v. Children's Hosp., 432 F.3d 50, 61 (1st Cir. 2005) (citing
163 Pleasant St., 960 F.2d at 1088-89). This "flexible, relaxed
standard," N. Laminate Sales, Inc. v. Davis, 403 F.3d 14, 25 (1st
Cir. 2005) (quoting Pritzker v. Yari, 42 F.3d 53, 61 (1st Cir.
1994)), requires only that the claim have a "demonstrable nexus"
to the defendant's forum contacts, Mass. Sch. of Law, 142 F.3d at
34. This requirement is easily met here.
B. Purposeful Availment
The case turns on the purposeful availment prong. To
meet this requirement, the Knoxes and MetalForming bear the burden
of demonstrating that Schechtl has "purposefully avail[ed] itself
of the privilege of conducting activities within the forum State,
thus invoking the benefits and protections of its laws." Hanson
v. Denckla, 357 U.S. 235, 253 (1958).
The purposeful availment requirement ensures that the
exercise of jurisdiction is essentially voluntary and foreseeable,
C.W. Downer, 771 F.3d at 66, and is not premised on a defendant's
"random, fortuitous, or attenuated contacts," Carreras v. PMG
Collins, LLC, 660 F.3d 549, 555 (1st Cir. 2011) (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). "[T]he Supreme
Court has explained that 'the foreseeability that is critical to
due process analysis . . . is that the defendant's conduct and
connection with the forum State are such that he should reasonably
anticipate being haled into court there.'" PREP Tours, 2019 WL
- 12 - 126221, at *6 (quoting Burger King, 471 U.S. at 474). This
requirement applies equally to foreign defendants. Plixer, 905
F.3d at 7.
Each side asserts that the Supreme Court's decision in
J. McIntyre Machinery, Limited v. Nicastro supports its view. Like
other circuits, we have held that the narrowest, and thus binding,
opinion from the "fragmented Court" in that case was Justice
Breyer's. Plixer, 905 F.3d at 10 (quoting Marks v. United States,
430 U.S. 188, 193 (1977)); accord Williams v. Romarm, SA, 756 F.3d
777, 784 (D.C. Cir. 2014) (finding Justice Breyer's concurring
opinion controlling under Marks); Ainsworth v. Moffett Eng'g,
Ltd., 716 F.3d 174, 178 & n.14 (5th Cir. 2013) (same); AFTG-TG,
LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1363 (Fed. Cir. 2012)
(same). In the end we do not think that this case, on the facts
here, fails the personal jurisdiction tests articulated by either
Justice Breyer's concurring opinion or the plurality opinion in
Nicastro.
The district court found that Schechtl had not
designated Massachusetts "for special attention" and had not
"target[ed] buyers within" Massachusetts. Knox, 303 F. Supp. 3d
at 186. Using those tests, the district court held that Schechtl
had not purposefully availed itself of the privilege of conducting
- 13 - business in the Commonwealth. Id.2 Those, as our Plixer decision
later made explicit, are not the exclusive tests to establish
purposeful availment.
In Plixer we concluded that "Supreme Court precedent
does not establish specific targeting of a forum as the only means
of showing that the purposeful availment test has been met." 905
F.3d at 9 (emphasis added). Depending on the facts, a defendant's
"'regular flow or regular course of sale' in the [forum]" could
make the exercise of jurisdiction foreseeable to the defendant.
Id. at 10. And, again depending on the facts, jurisdiction could
be foreseeable based on "something more" than this, evidencing an
intent to serve the forum. Id. (citing Asahi Metal Indus. Co.,
Ltd. v. Superior Court of Cal., 480 U.S. 102, 111-12 (1987)
(opinion of O'Connor, J.)). Justice O'Connor's plurality opinion
in Asahi, endorsed by the plurality opinion in Nicastro, see 564
U.S. at 885 (plurality opinion), says that "something more" may
include, "for example, 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
2 To be clear, there is no argument that a producer like Schechtl is subject to jurisdiction solely because it knows that its products might be sold in Massachusetts. See Nicastro, 564 U.S. at 891 (Breyer, J., concurring) (rejecting such a standard). - 14 - as the sales agent in the forum State." Asahi, 480 U.S. at 112
(opinion of O'Connor, J.).
Specific jurisdiction must rest on a defendant's
voluntary contact with the forum and not on "the 'unilateral
activity of another party or a third person.'" Burger King, 471
U.S. at 475 (quoting Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 417 (1984)). The argument for jurisdiction
here does not rest on MetalForming's Massachusetts activities. It
rests instead on the totality of Schechtl's activities,
voluntarily undertaken, that connect the German company to
These voluntary acts on Schechtl's part led to a "regular
flow or regular course of sales," and more than that, in the
Commonwealth. Over sixteen years, Schechtl, through MetalForming,
sold forty-five machines (an average of close to three machines in
each of those sixteen years). It also provided 234 parts to
purchasers in Massachusetts. Those parts and machines led to
nearly $1.5 million of Massachusetts sales for Schechtl.
We compare this case to Plixer, in which we upheld the
exercise of jurisdiction over a defendant who, over three-and-a-
half years, served 156 forum customers, generating about $200,000
in business. See 905 F.3d at 4-5; see also id. at 11 (describing
post-Nicastro rulings upholding the exercise of jurisdiction based
on "a regular course of sales"). And we compare Schechtl to the
- 15 - defendant in Nicastro, who Justice Breyer described as having made
"a single isolated sale" into the forum. 564 U.S. at 888 (Breyer,
J., concurring). Schechtl certainly does not fall into the
category of manufacturer, "small" in "shape[] and size[],"
described by Justice Breyer in Nicastro. Id. at 892 (Breyer, J.,
concurring).
Schechtl argues that we should discount its
Massachusetts sales because those sales were part of a nationwide
sales effort. But the question is not whether a defendant sells
its product across the U.S.; it is instead whether a defendant's
forum connection is such "that the exercise of jurisdiction is
essentially voluntary and foreseeable." Plixer, 905 F.3d at 7
(citing C.W. Downer, 771 F.3d at 66); see Ainsworth, 716 F.3d at
179 (upholding the exercise of jurisdiction based on substantial
in-forum sales, even though the defendant's forum sales
represented only 1.55% of its nationwide sales during the relevant
period). And we note that the use of a nationwide distributor
does not automatically preclude the exercise of jurisdiction. See
Ainsworth, 716 F.3d at 179 (upholding the exercise of jurisdiction
over a manufacturer even though the manufacturer employed a
nationwide distributor).
To be clear, we do not hold that the mere volume of
Schechtl's sales in Massachusetts over sixteen years standing
- 16 - alone would suffice (a hypothetical situation we need not address).
There is more here.
Schechtl individually approved and manufactured
according to purchaser-provided specifications each of the nearly
fifty machines it sent to Massachusetts purchasers. See In re
Chinese-Manufactured Drywall Prods. Liab. Litig., 742 F.3d 576,
589 (5th Cir. 2014) (upholding the exercise of personal
jurisdiction based in part on the defendant's fulfilling product
orders on a "made-to-order basis"); cf. Asahi, 480 U.S. at 112
(opinion of O'Connor, J.) (adding that "designing the product for
the market in the forum State" may be "additional conduct"
necessary to make the exercise of jurisdiction constitutional).
Schechtl's relationship with purchasers in Massachusetts
did not end when Schechtl accepted the purchase order and
manufactured the machine. Schechtl required that MetalForming
include, with each machine, materials that instructed that
purchaser to contact Schechtl directly, whether to purchase
replacement parts or to obtain assistance with troubleshooting and
fixing problems. From the fact that hundreds of Schechtl parts
were delivered to Massachusetts, the inference is entirely
plausible that Massachusetts purchasers did use the channels
Schechtl established both as to spare parts and as to
troubleshooting.
- 17 - Schechtl's channels to Massachusetts purchasers
constitute efforts to continue -- and perhaps to expand -- its
relationship with Massachusetts purchasers. Those deliberately
opened channels, kept open over many years and presumably used,
are relevant to the jurisdictional analysis. See Asahi, 480 U.S.
at 112 (opinion of O'Connor, J.) (noting that "establishing
channels for providing regular advice to customers in the forum
State" may be "something more" in support of jurisdiction). Those
channels established a direct link between Schechtl and its
purchasers. Here that means that Schechtl voluntarily opened at
least forty-five such direct links with Massachusetts purchasers.
Schechtl's long service of purchasers in Massachusetts through at
least its spare parts sales bolsters our conclusion that the
exercise of jurisdiction here is foreseeable.3
Purposeful availment analysis "'will vary with the
quality and the nature of the defendant's activity.'" PREP Tours,
2019 WL 126221, at *6 (quoting Burger King, 471 U.S. at 474-75).
This case involves a manufacturer which can direct where its
products go, which sold dozens of expensive products into the forum
3 Schechtl argues that it did not know that CCC was located in Massachusetts. Even if that contention were correct, we would not consider it dispositive given all the other facts here. We do not comment on MetalForming's argument that Schechtl should have known CCC's location. We also do not rest on, or even reach, the argument that Schechtl made no effort to exclude Massachusetts purchasers from its American market. Cf. Ainsworth, 716 F.3d at 179. - 18 - over nearly two decades, and which initiated an ongoing
relationship with its in-forum purchasers. Nicastro, by contrast,
involved a manufacturer which lacked any similar ability to control
the end location of its products, see 564 U.S. at 878 (plurality
opinion) (noting that there was "no allegation that the distributor
was under [the defendant's] control"), and which had no other
relationship with the forum, see id. at 886. The defendant there
knew only "that its products are distributed through a nationwide
distribution system that might lead to those products being sold
in any of the fifty states." Id. at 879 (internal quotation marks
omitted). None of the opinions from Nicastro require that we
accept Schechtl's arguments on appeal.
Schechtl's only remaining argument is that MetalForming
takes title to the Schechtl products in Germany. First Circuit
law has long found this argument irrelevant to the jurisdictional
analysis. See Benitez-Allende v. Alcan Aluminio do Brasil, S.A.,
857 F.2d 26, 30 (1st Cir. 1988) (Breyer, J.) ("The fact that title
to the [products] passed in [a foreign country] is beside the
point, for '[i]f International Shoe stands for anything, however,
it is that a truly interstate business may not shield itself from
suit by a careful but formalistic structuring of its business
dealings.'" (quoting Vencedor Mfg. Co., Inc. v. Gougler Indus.,
Inc., 557 F.2d 886, 891 (1st Cir. 1977))). The same is true for
an international business.
- 19 - C. Reasonableness
We explain briefly why we consider the exercise of
jurisdiction to be reasonable under the five "gestalt" factors:
(1) the defendant's burden of appearing [in the forum], (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994)
(citing Burger King, 471 U.S. at 477). Schechtl in its briefs,
but not at oral argument, argues that Massachusetts litigation
would be burdensome because it is a German company with German
employees, and that cross-Atlantic travel and communications would
impose burdens on its employees. That there is some burden on
Schechtl (which can be mitigated) is not enough on the facts here
to make the exercise of jurisdiction unreasonable. See Plixer,
905 F.3d at 13 (noting that "'[w]hen minimum contacts have been
established, often the interests of the plaintiff and the forum in
the exercise of jurisdiction will justify even the serious burdens
placed on the alien defendant'" (quoting Asahi, 480 U.S. at 114
(opinion of O'Connor, J.)); see also C.W. Downer, 771 F.3d at 70
(noting that many of the case's logistical challenges "can be
resolved through the use of affidavits and video devices").
- 20 - III.
We conclude that the exercise of personal jurisdiction
over Schechtl comports with due process. We reverse and remand
for further proceedings consistent with this opinion.
- 21 -