Windon v. Home Depot USA Incorporated

• Court: District Court, D. Arizona
• Decided: May 29, 2024
• Docket: 2:24-cv-00494
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Aaron Windon, et al., No. CV-24-00494-PHX-JJT

10 Plaintiffs, ORDER

11 v.

12 Home Depot USA Incorporated, et al.,

13 Defendants. 14 15 At issue is Defendant Welding Cutting Tools & Accessories, LLC’s Motion to 16 Dismiss for Lack of Personal Jurisdiction (Doc. 8, MTD), to which Plaintiffs Aaron and 17 Susan Windon filed a Response (Doc. 14, Resp.) and Defendant filed a Reply (Doc. 17, 18 Reply). Also at issue are Plaintiffs’ requests for jurisdictional discovery and transfer of 19 venue. (Resp. at 9.) The Court has reviewed the parties’ briefs and finds this matter 20 appropriate for decision without oral argument. See LRCiv 7.2(f). For the reasons set forth 21 below, the Court grants Defendant’s Motion to Dismiss and Plaintiffs’ request for transfer 22 of venue. 23 I. BACKGROUND 24 In the First Amended Complaint (Doc. 1-1 at 2–19, FAC), Plaintiffs allege the 25 following facts. At the relevant times, Plaintiffs were residents of Arizona. (FAC ¶ 1.) 26 Mr. Windon sustained a permanent eye injury while using a welding helmet that was 27 produced by Defendant Welding Cutting Tools & Accessories (WCTA), an Ohio 28 corporation. Plaintiffs claim that the welding helmet in question had a defect that stopped 1 the auto dampening lenses from dampening when Mr. Windon started welding. (FAC 2 ¶¶ 35–38, 61.) Mr. Windon purchased the welding helmet from a Home Depot store in 3 Queen Creek, Arizona. (FAC ¶ 32.) Plaintiffs have brought suit against WCTA, Home 4 Depot U.S.A., Inc, and Tecmen Electronics Co. Ltd., raising four claims: strict products 5 liability; negligence in design, manufacture, inspection, and distribution; negligence in 6 failure to warn and recall; and loss of consortium. 7 Plaintiffs allege Defendant WCTA “engaged in substantial commerce and business 8 activity” in Arizona including “researching, developing, designing, licensing, 9 manufacturing, distributing, selling, marketing, and/or introducing into interstate 10 commerce . . . its products.” (FAC ¶ 14.) This, however, is contradicted by the Declaration 11 of the Vice President of WCTA, Tim Keller. Mr. Keller avers that WCTA did not design, 12 manufacture, or assemble the welding helmet in question in Arizona. (MTD Ex. 1, Keller 13 Decl. at 14.) Nor does WCTA directly market or advertise its products to customers 14 residing in Arizona. (Keller Decl. at 23.) Moreover, WCTA does not have any offices, 15 warehouses, plants, employees, leases, subleases, real property, or bank accounts in 16 Arizona. (Keller Decl. at 8–10.) WCTA is not organized under Arizona laws or registered 17 with the Arizona Secretary of State or the Arizona Corporation Commission and does not 18 maintain a registered agent in Arizona. (Keller Decl. at 7.) 19 WCTA does have a national distribution agreement with Home Depot to distribute 20 its products. (Keller Decl. at 16.) WCTA also provides information to Home Depot about 21 its merchandise to be used on Home Depot’s website. (Keller Decl. at 23.) At times, WCTA 22 ships orders placed by customers on Home Depot’s website directly to the customers rather 23 than to a Home Depot distribution center. (Keller Decl. at 19–20.) Typically, however, 24 WCTA sends its products to a Home Depot distribution center and Home Depot sends the 25 products to retail stores or to the customers who order online. (Keller Decl. at 18–19.) 26 Home Depot controls and directs any direct shipment from WCTA to customers. (Keller 27 Decl. at 20–21.) WCTA has no interaction with the individual customer before and during 28 the purchase, and only on occasion does WCTA send the product to the customer at the 1 direction of Home Depot. (Keller Decl. at 20–21.) WCTA now moves to dismiss for lack 2 of personal jurisdiction. 3 II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION 4 A. Legal Standard 5 For a federal court to adjudicate a matter, it must have jurisdiction over the parties. 6 Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982). The party 7 bringing the action has the burden of establishing that personal jurisdiction exists. 8 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citing McNutt v. 9 Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83 (1936)); Data Disc, Inc. v. Sys. Tech. 10 Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). When a defendant moves, prior to trial, 11 to dismiss a complaint for lack of personal jurisdiction by challenging the plaintiff’s 12 allegations, the plaintiff must “‘come forward with facts, by affidavit or otherwise, 13 supporting personal jurisdiction.’” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) 14 (quoting Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). 15 Because there is no statutory method for resolving the question of personal 16 jurisdiction, “the mode of determination is left to the trial court.” Data Disc, 557 F.2d at 17 1285 (citing Gibbs v. Buck, 307 U.S. 66, 71-72 (1939)). Where, as here, a court resolves 18 the question of personal jurisdiction upon motions and supporting documents, the plaintiff 19 “must make only a prima facie showing of jurisdictional facts through the submitted 20 materials in order to avoid a defendant’s motion to dismiss.” Id. In determining whether 21 the plaintiff has met that burden, the “uncontroverted allegations in [the plaintiff’s] 22 complaint must be taken as true, and conflicts between the facts contained in the parties’ 23 affidavits must be resolved in [the plaintiff’s] favor.” Rio Props., Inc. v. Rio Int’l Interlink, 24 284 F.3d 1007, 1019 (9th Cir. 2002) (citation omitted). 25 To establish personal jurisdiction over a nonresident defendant, a plaintiff must 26 show that the forum state’s long-arm statute confers jurisdiction over the defendant and 27 that the exercise of jurisdiction comports with constitutional principles of due process. Id.; 28 Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Arizona’s 1 long-arm statute allows the exercise of personal jurisdiction to the same extent as the 2 United States Constitution. See Ariz. R. Civ. P. 4.2(a); Cybersell v. Cybersell, 130 F.3d 3 414, 416 (9th Cir. 1997); A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995) 4 (stating that under Rule 4.2(a), “Arizona will exert personal jurisdiction over a nonresident 5 litigant to the maximum extent allowed by the federal constitution”). Thus, a court in 6 Arizona may exercise personal jurisdiction over a nonresident defendant so long as doing 7 so accords with constitutional principles of due process. Cybersell, 130 F.3d at 416. 8 Due process requires that a nonresident defendant have sufficient minimum contacts 9 with the forum state so that “maintenance of the suit does not offend ‘traditional notions of 10 fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) 11 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)); see also Data Disc, 557 F.2d at 12 1287. Courts recognize two bases for personal jurisdiction within the confines of due 13 process: “(1) ‘general jurisdiction’ which arises when a defendant’s contacts with the 14 forum state are so pervasive as to justify the exercise of jurisdiction over the defendant in 15 all matters; and (2) ‘specific jurisdiction’ which arises out of the defendant’s contacts with 16 the forum state giving rise to the subject litigation.” Birder v. Jockey’s Guild, Inc., 444 F. 17 Supp. 2d 1005, 1008 (C.D. Cal. 2006). 18 Plaintiffs do not contend that the Court has general jurisdiction over Defendant, and 19 Defendant argues it is not subject to specific personal jurisdiction in Arizona based on the 20 facts giving rise to Plaintiffs’ claims. Whether a court may exercise specific jurisdiction in 21 a given case turns on the extent of the defendant’s contact with the forum and the degree 22 to which the plaintiff’s suit is related to the defendant’s contacts. Yahoo! Inc. v. La Ligue 23 Contre Le Racisme et L’Antisemitisme, 433 F.3d 1199, 1210 (9th Cir. 2006). The Ninth 24 Circuit uses the following approach to determine whether a court may exercise specific 25 jurisdiction over a nonresident defendant: (1) the nonresident defendant must do some act 26 in or consummate some transaction with the forum, or perform some act by which it 27 purposefully avails itself of the privilege of conducting activities in the forum, thereby 28 invoking the benefits and protections of its laws; (2) the claim must be one which arises 1 out of or results from the defendant’s forum-related activities; and (3) the exercise of 2 jurisdiction must be reasonable. Data Disc, 557 F.2d at 1287. 3 The plaintiff bears the burden of establishing the first two requirements of the test. 4 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). If the 5 plaintiff establishes the first two requirements, the burden shifts to the defendant to 6 establish that the third requirement is not met. Mavrix Photo, Inc. v. Brand Techs., Inc., 7 647 F.3d 1218, 1228 (9th Cir. 2011) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 8 476-78 (1985)). All three requirements must be met for the exercise of jurisdiction to 9 comport with constitutional principles of due process. Omeluk, 52 F.3d at 270. 10 To meet the first element—that the defendant purposefully directed activities at the 11 forum state—the plaintiff must show the defendant “either (1) ‘purposefully availed’ 12 himself of the privilege of conducting activities in the forum, or (2) ‘purposefully directed’ 13 his activities towards the forum.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th 14 Cir. 2006) (quoting Schwarzenegger, 374 F.3d at 802). The purposeful availment analysis 15 is used in product liability cases. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 880 16 (2011). 17 A defendant purposefully avails itself of the benefits of a forum if it has 18 “deliberately ‘engaged in significant activities within a State or has created ‘continuing 19 obligations’ between himself and the residents of the forum.’” Gray & Co. v. Firstenberg 20 Mach. Co., 913 F.2d 758, 760 (9th Cir. 1990) (quoting Burger King Corp., 471 U.S. at 21 475–76). Merely placing a product in the stream of commerce is not enough to satisfy the 22 purposeful availment test if that product finds its way into a jurisdiction and a suit arises. 23 Asahi Metal Indus. Co. v. Superior Ct. of Cal., Solano Cnty., 480 U.S. 102, 112 (1987). 24 There must be something more. Id. This “something more” standard for purposeful 25 availment when using a distributor who places the defendant’s merchandise into a forum 26 is not satisfied by the defendant’s awareness that the stream of commerce will sweep the 27 product into the forum state. LNS Enters. LLC v. Cont’l Motors, Inc., 22 F.4th 852, 861 28 (9th Cir. 2022) (quoting Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 459 1 (9th Cir. 2007)). The “something more” requirement can be satisfied by “designing the 2 product for the market in the forum State, advertising in the forum State, establishing 3 channels for providing regular advice to customers in the forum State, or marketing the 4 product through a distributor who has agreed to serve as the sales agent in the forum State.” 5 Asahi, 480 U.S. at 112. A plaintiff can also prove that these acts amounted to more than 6 just placing the products in the stream of commerce by showing that the defendant 7 deliberately navigated the stream of commerce towards the forum state by “creat[ing], 8 control[ling], or employ[ing] the distribution system.” Yamashita v. LG Chem, Ltd., 62 9 F.4th 496, 503 (9th Cir. 2023) (quoting Asahi, 480 U.S. at 1027). 10 B. Analysis 11 To determine whether specific jurisdiction over Defendant lies, the Court inquires 12 whether the submitted evidence shows there are sufficient minimum contacts such that 13 Defendant purposefully availed itself of the forum state by entering into a national 14 distribution agreement with Home Depot, which then sold the products to individuals in 15 Arizona. The answer is no. Defendant simply entered into a national distribution agreement 16 with Home Depot to sell its merchandise, and without more, the distribution agreement 17 does not justify exercising personal jurisdiction over Defendant. Defendant does not 18 advertise to consumers in Arizona and in no way targets Arizona residents through its 19 online listing on Home Depot’s website. Defendant also does not control, employ, or create 20 the distribution system through which its product enters the state, as stated in the Keller 21 Declaration. All interaction between WCTA’s products and Arizonans is facilitated, 22 encouraged, and controlled by Home Depot. Thus, WCTA has done nothing in the context 23 of its distribution agreement with Home Depot to purposefully avail itself of the benefits 24 of this forum for the purposes of specific personal jurisdiction. 25 The act of shipping directly to customers falls in the same category as the 26 distribution agreement. All reach into the state of Arizona, including advertising, customer 27 interaction, and transaction, was conducted under the control of Home Depot—the 28 distributor. Defendant’s activity was limited to shipping the merchandise to certain 1 individual customers in Arizona rather than the distributor, entirely at the direction of the 2 distributor. Defendant placed its product into the stream of commerce when it entered into 3 a distribution agreement with Home Depot, and shipping directly from Defendant to 4 customers in the forum state does not amount to the “something more” required to 5 purposefully avail Defendant of the privileges of conducting business in Arizona. 6 Defendant’s sporadic and minimal reach into the state by shipping directly to customers is 7 not sufficiently deliberate and thus fails the purposeful availment standard. 8 Plaintiffs argue that placing an item in the stream of commerce in conjunction with 9 the intent to serve the market in the forum state is enough to establish Defendant 10 purposefully availed itself. (Resp. at 5.) But Plaintiffs fail to allege how Defendant had an 11 intent to serve the specific market of Arizona. The intent of the distribution agreement was 12 to serve a national market, not Arizona specifically. (Keller Decl. at 16–17.) 13 The application of the standard set forth in Cybersell, applied in Chorost, is not 14 applicable here. The court in Cybersell specified the following standard for online 15 commercial activity in a state:

16 [T]he likelihood that personal jurisdiction can be constitutionally exercised 17 is directly proportionate to the nature and quality of commercial activity that an entity [the defendant] conducts over the Internet. 18 19 130 F.3d at 419 (quoting Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 20 (W.D. Pa. 1997)). In the present case, Home Depot is the entity conducting commercial 21 activity over the internet, not WCTA. Defendant’s commercial activity ceases once it 22 places the product in the stream of commerce by way of Home Depot. How Home Depot 23 then purposefully and independently interacts with Arizona is not relevant to the specific 24 personal jurisdiction over WCTA. And, as stated above, shipping to certain customers 25 directly at the sole direction of Home Depot—as opposed to shipping to Home Depot—is 26 not enough to overcome the stream of commerce standard and bestow specific personal 27 jurisdiction over Defendant. 28 1 Because Plaintiffs do not show Defendant’s acts satisfy the purposeful availment 2 standard, the first element necessary to establish specific personal jurisdiction is lacking 3 and the Court need not consider the subsequent elements. The Court lacks personal 4 jurisdiction over WCTA in this matter. 5 III. PLAINTIFFS’ REQUESTS 6 A. Request for Jurisdictional Discovery 7 Plaintiffs ask to be able to conduct jurisdictional discovery (Resp. at 9), but do not 8 adequately demonstrate what material facts they anticipate such discovery will reveal— 9 that is, what conduct Defendant engaged in that purposefully availed itself of the benefits 10 of the State of Arizona. The discovery Plaintiffs ask for is either answered by the Keller 11 Declaration or immaterial to the question of specific personal jurisdiction. The Court will 12 deny the request. 13 B. Request for Transfer to the Northern District of Ohio 14 In response to Plaintiffs’ alternative request (Reply at 9), the Court will transfer the 15 claims against WCTA to the Northern District of Ohio. 28 U.S.C. § 1631, which addresses 16 the Court’s transfer of a case to cure want of jurisdiction, authorizes the Court to transfer 17 this case to “any other such court in which the action . . . could have been brought at the 18 time it was filed.” Venue is proper where “any defendant resides” or where “a substantial 19 part of the events or omissions giving rise to the claim occurred.” 28 U.S.C. § 1391(b). 20 Under 28 U.S.C. § 1404(a), “[f]or the convenience of parties and witnesses, in the 21 interest of justice, a district court may transfer any civil action to any other district or 22 division where it might have been brought.” 28 U.S.C. § 1404(a). A district court has 23 discretion “to adjudicate motions for transfer according to an ‘individualized, case-by case 24 consideration of convenience and fairness.’” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 25 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). The Ninth Circuit 26 has set forth a multi-factor test to determine if transfer should be granted. Jones v. GNC 27 Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). Because no party opposes transfer, 28 and all factors weigh in favor of transfer, the Court will grant Plaintiffs’ request for transfer 1 || to the Northern District of Ohio. In doing so, the Court must sever Plaintiffs’ claims against || WCTA, and the claims against the other Defendants will remain pending in this Court. 3 IT IS THEREFORE ORDERED granting Defendant’s Motion to Dismiss for 4|| Lack of Personal Jurisdiction (Doc. 8). 5 IT IS FURTHER ORDERED severing Plaintiffs’ claims against Defendant 6|| Welding Cutting Tools & Accessories, LLC, and directing the Clerk of Court to transfer || those claims to the District Court for the Northern District of Ohio as soon as practicable. 8 Dated this 29th day of May, 2024. CN

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