State Appeals Court Finds Personal Jurisdiction Over Foreign Part Maker

An Illinois appeals court recently held that Illinois courts may exercise jurisdiction over a French manufacturer of helicopter parts. Russell v. SNFA, No. 1-09-3012 (Ill. App. Ct.,  3/31/11).  The court reversed the trial court's decision to dismiss the case for lack of personal jurisdiction.

Readers know that the issues of personal jurisdiction over foreign product manufacturers is currently pending before the U.S. Supreme Court as we have posted before. This case underscores the importance of Supreme Court guidance in this area.

Plaintiff’s brother died during a helicopter crash in Illinois. He was the pilot and sole occupant, and was working for Air Angels, a medical air service that did business primarily in Illinois and, in particular, Cook County.  Defendant SNFA, a French company, made a part for that helicopter, which plaintiff claims was defective and the cause of the crash. Specifically, plaintiff alleged that the crash was caused by  the failure of one of the helicopter’s tail-rotor drive-shaft bearings, which defendant manufactured. Plaintiff alleged that, as a result of this failure, the drive shaft fractured, leaving the tail rotor inoperable; and the helicopter spun out of control.

Defendant moved to dismiss on the ground that Illinois had no jurisdiction over it.  Illinois has a jurisdictional statute, like many states, with a catchall provision which permits Illinois courts to exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution
and the Constitution of the United States. This permits an Illinois court to exercise personal jurisdiction to the extent permitted by the due process clause of the 14th Amendment to the United States Constitution.

General jurisdiction exists when defendant’s general business contacts with the forum state are continuous and systematic. Specific jurisdiction exists when the cause of action arose out of defendant’s contacts with the forum state.  Here, the court of appeals found that the state court had specific jurisdiction over defendant.  One relevant factor is whether the litigation results from alleged injuries that arise out of or relate to the defendant's activities in the state or directed to the state. For a tort action, the state in which the injury occurs is often considered to be the state in which the tort occurred. In the case at bar, the injury occurred in Illinois, and thus Illinois was deemed the state in which this tort occurred.  Numerous prior cases had noted that tortfeasors must expect to be haled into Illinois courts for torts where the injury took place there.

The court of appeals was also persuaded by the fact that the defendant was the same, and indeed many of the facts alleged the same, as in Rockwell International Corp. v. Costruzioni Aeronautiche Giovanni Agusta, S.P.A., 553 F.Supp. 328 (E.D. Pa. 1982).  The federal court there had held that the forum state, which was the site of the crash, could exercise specific personal jurisdiction over defendant SNFA. In both cases defendant had allegedly custom-made bearings for an A-109 helicopter; a subsequent owner replaced the tail-rotor drive-shaft bearings, with ones also manufactured by defendant. In both cases plaintiff alleged that the bearings and the drive shaft
failed, causing the helicopter to crash.

The Illinois court also determined that a relevant sale occurred in the state, despite the fact that the defendant sold the parts outside the U.S. It found that the cause of action could be traced from the sale of the ball bearings by SNFA, through its chain of distribution, to the apparent malfunction that allegedly caused the helicopter to crash. As a result, the court concluded that the “sale, malfunction and injury all occurred within” the forum state.

Defendant argued against minimum contacts claiming that its sales of ball bearings to the helicopter-maker Agusta were confined to Europe and that a court should not blur the distinction between Agusta.  But the court stressed that because the ball bearings were custom-made, SNFA intended its products to be an inseparable part of the marketing plan of Agusta.  That is, the bearing was uniquely designed for incorporation into Agusta’s helicopter, and SNFA had to
distribute its product through Agusta’s distributions system.  Agusta provided defendant with precise specifications, and defendant manufactured the bearings according to those specifications. Defendant acknowledged that it knows that its custom-made tail-rotor bearings are
incorporated by Agusta into helicopters and also sold as individual replacement parts.

SNFA did not deny that it knew that Agusta helicopters were sold throughout the United States, and that Agusta had an American subsidiary for the purpose of American distribution. Given the distribution system, SNFA had ample reason to know, said the court, and expect, that its bearing, as a unique part of a larger product, would be marketed in any or all states, including the forum state. By virtue of having a component specifically designed for the Agusta helicopter, SNFA had a "stake in" and expected to derive definite benefit from sales of the Agusta A-109 (and replacement parts) in the United States.

In essence, Agusta was the marketer and distributor to the consumer of their joint and ultimate product. SNFA has chosen to leave to Agusta the marketing and distribution to the consumer. Agusta was thus called the conduit through which this SNFA product, custom-made for Agusta, reached the ultimate consumers.

Finally, because the court found that SNFA designed and manufactured a component that was incorporated into a product which was intended to be, and was in fact, sold in the United States, it also concluded that where that component allegedly fails and causes injury in the very market in which the product was expected to be sold, it is not unreasonable or unfair to require the defendant to be subject to suit in that forum.

In one respect, this case does not present the most aggressive application of specific jurisdiction, in that the facts suggest something beyond mere stream of commerce jurisdiction, something more than just plain having sold a product that found its way into the forum.  But of great concern for foreign manufacturers would be the analysis of the nationwide distribution scheme, and the notion that by selling a part to a customer that has a national distribution system, a manufacturer thereby exposes itself to tort suits everywhere in the U.S.

 


 

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