The World in U.S. Courts: Fall 2014 - Personal Jurisdiction
September.26.2014
Plaintiff brought product liability claims against two companies, an Australian manufacturer and its U.S. subsidiary, arising out of injuries allegedly suffered as a result of a cochlear implant in her ear. The Australian manufacturer argued that the U.S. District Court in Brooklyn did not have personal jurisdiction over it, and that it should be dismissed from the case.
The Court addressed the question whether specific personal jurisdiction existed under the applicable New York statute. That statute confers jurisdiction, where a tortious act is alleged to have caused injury in New York, if the plaintiff's allegations would show that the defendant conducts business regularly in New York or derives a substantial volume of revenue from its New York activities, and should reasonably expect the alleged conduct to have consequences in New York. The District Court found these tests to be satisfied, based on allegations of the Australian parent's substantial sales into New York, supporting a network of 43 customer-clinics, and its related profitability.
The Court then considered whether the assertion of jurisdiction was consistent with the Due Process Clause of the U.S. Constitution. In this regard the Court noted that all sales of the relevant implant were made by the Australian parent's subsidiary in Colorado, and that the subsidiary's activities in selling to New York customers could not be imputed to its parent, absent a showing that the relationship between the parent and subsidiary was so close that the subsidiary's corporate existence should be ignored. Based on a declaration submitted by the parent, attesting to the independence and substance of the subsidiary, the Court rejected this ground. The Court also rejected the argument that specific personal jurisdiction could be based on the parent's operation of a website that could be accessed from New York, finding the website "passive"—merely providing information and directing U.S. consumers to a website maintained by its U.S. subsidiary. The Court thus concluded that the Australian parent did not have sufficient contacts with New York to satisfy federal constitutional requirements.