State Farm Fire & Casualty Co. v. Swizz Style, Inc.

246 F. Supp. 3d 880
CourtDistrict Court, S.D. New York
DecidedMarch 23, 2017
DocketNo. 15 Civ. 9432 (NSR)
StatusPublished
Cited by17 cases

This text of 246 F. Supp. 3d 880 (State Farm Fire & Casualty Co. v. Swizz Style, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Farm Fire & Casualty Co. v. Swizz Style, Inc., 246 F. Supp. 3d 880 (S.D.N.Y. 2017).

Opinion

OPINION & ORDER

NELSON S. ROMÁN, United States District Judge

An air purifier designed overseas by a Swiss corporation caught fire and caused damage to a home located' in Bedford Hills, NY. The insurance company covering the home brought suit against the U.S. distributor of the air purifier claiming design defects caused the fire. The distributer counter-sued the foreign manufacturer. The foreign third-party defendant now seeks to dismiss the third-party complaint for lack of personal jurisdiction. Despite recent Supreme Court cases restricting the exercise of personal jurisdiction over foreign defendants, the manufacturer in this case has sufficient contacts with New York to establish specific jurisdiction.

For the following reasons, the motion to dismiss is DENIED.

BACKGROUND

For the purposes of determining whether personal jurisdiction exists over the third-party defendant, the relevant facts taken from the motion papers are as follows.1

I. Facts Alleged in the Underlying Action

In mid-2012, David Hawker, a resident of Bedford Hills, New York, came to own a “Viktor” air purifier when it was “drop-shipped” to him via “the gilt.com website” [884]*884by Swizz Style, Inc. (Answer ¶ 8, ECF No. 11.) On June 26, 2014, the air purifier caught fire at Mr. Hawker’s property in Bedford Hills causing damage to his home and personal property. (Notice of Removal, Ex. 1 (Verified Compl.) ¶¶ 10, 12.) Fortunately, Mr. Hawker had an insurance policy issued by State Farm Fire & Casualty Co. (“State Farm”) covexing the property and personal items contained therein. (Id. ¶ 8.)

After the fire, State Farm exercised its rights under the policy and, as subrogor, sued Swizz Style on behalf of Hawker, as subrogee, alleging Swizz Style’s negligence led to the defective air purifier catching fire and causing property damage in the amount of $267,141.47. (Id. ¶¶ 3, 14, 20.) State Farm alleged that Swizz Style “designed, manufactured, built, tested, distributed, delivered, sold, impaired, serviced, and/or inspected” the air purifier and “sold and distributed [the] air purifier to wholesale and retail establishments for its sale and distribution in the State of New York.” (Id. ¶¶ 10-11.)

Swizz Style responded to the allegations by admitting that “it sold the [ ] air purifier [at issue] before June 26, 2014” and further explaining that “it sells the V[iktor] air purifier in the United States” but “purchased and continues to purchase the [ ] air purifiers it sells from Stadler Form Aktiengesellschaft” (“Stadler Form”), which is located in Switzeiland. (Answer ¶ 5.) Swizz Style additionally denied that the air purifier was defective and denied responsibility for whatever acts led to Hawker’s damages. (Id. ¶¶ 21-22.) Rather, Swizz Style alleged it would be entitled to indemnification from Stadler Form, the party “solely responsible for defectively designing, manufacturing, building, testing, distributing, delivering, selling, repairing, servicing or inspecting the air purifier in all relevant respects[.]” (Third Party Compl. ¶¶ 14, 17.)

II. The Relationship Between Distributor Swizz Style, Manufacturer Stadler Form, and New York

Stadler Form was organized under the laws of Switzerland starting in 1998 and operates out of Lug, Switzerland. (Becker Aff. ¶¶ 3, 4.) Stadler Fox-m has never been incorporated in New York, has never maintained its principal place of business or an office in New York, has never maintained any employees or bank accounts in New York, has never been registered to do business or had a registered agent for service of process in New York, has never owned or leased any property in New York or had a New York phone number, and has never paid any taxes to New York. (Id. ¶¶ 6-14, 17.) Stadler Form alleges that it maintains no assets in New York, and that no employee of Stadler Form travelled to New York on its behalf in connection to the matters at issue in this lawsuit. (Id. ¶ 15, 16.)

Instead, Swizz Style, an Ohio-based corporation, purchased Viktor air purifiers from Stadler Form pursuant to a written distribution agreement. (Third Party Compl. ¶¶ 6, 7, 13.) Swizz Style has been the exclusive U.S. distributor of Stadler Form’s goods since 2006. (Baenziger Decl. ¶ 5.) The purifiers are shipped “free-on-board” and title is transferred between Stadler Form and Swizz Style in China. (Becker Aff. ¶ 22.) Stadler Form thus asserts that the allegedly negligent actions connected to the manufacturing of the air purifier would have taken place in either Switzerland or China. (Id. ¶ 19.)

Stadler Form assex-ts that it does not directly sell, distribute, or transfer the Viktor air purifiers to citizens of New York. (Becker Aff. ¶¶ 20-21.) Moreover, Stadler Form alleges it “did not have any input and/or control regarding where Swiss Style would ultimately sell the [ ] air purifiers in the United States.” (Id. ¶ 23.) Instead, it was Swizz Style that had the [885]*885“responsibility] for selling and delivering the [ ] air purifiers to end users and retailers in the United States.” (Id. ¶ 24.) Swizz Style, however, alleges that Stadler Form — which “derives most of its revenue from international commerce” — chose to “target[] New York as a market for its fashionable, stylish products, and was keenly aware of the significant sales of [its products]” in New York. (Baenziger Decl. ¶¶ 2, 8.)

In fact, Swizz Style and Stadler Form engaged in “many meetings in 2010 and 2011 in which [they] discussed [ ] th[ose] considerations and made New York a target because of them.” (Id. ¶ 10.) Swizz Style alleges that focusing on New York paid off, as Stadler Form knew: in 2012, “monthly meetings by Skype” took place between the two where Swizz Style “advise[d] Stadler Form’s personnel, including its principal Martin Stadler, on significant sales and its significant retailer/resellers buyers, especially those in New York.” (Id. ¶ 12.) Swiss Style alleges that at the time Mr. Hawker pm-chased his Viktor air purifier, New York made up 34% of Swiss Style’s sales of Stadler Form products. (Id. ¶ 14.) As to Swizz Style’s knowledge of Stadler Form’s main source of revenue, the principal of Swizz Style — based on his “long association with Stadler Form and its principals before and after December 2011”2 — asserts that Stadler Form “derives most of its substantial revenues from international commerce.” (Id. ¶ 19; see also Stadler Reply at 6 (undisputed).)

Regarding the fire at' issue in the direct action, Swizz Style alleges that Stadler Form provided “retrofitting kits” to “correct[ ] a potential overheating condition in the Viktor air purifiers sold ... into New York” after a government recall of the purifiers in Europe between 2011 and 2012. (Id. ¶ 3.) Moreover, Swizz Style alleges Stadler Form “encouraged” it to delete any records of the reworking of the units, which it contends demonstrates Stadler Form “knew or should have known that it could be called to account for a fire in New York.” (Id.)

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Cite This Page — Counsel Stack

Bluebook (online)
246 F. Supp. 3d 880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-fire-casualty-co-v-swizz-style-inc-nysd-2017.