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Allstate Property and Casualty Insurance Co. v. Grohe Canada, Inc.

United States District Court, D. New Hampshire

February 13, 2018

Allstate Property and Casualty Insurance Company, Plaintiff
v.
Grohe Canada, Inc., Defendant

          ORDER

          STEVEN J. MCAULIFFE UNITED STATES DISTRICT JUDGE.

         Allstate Property and Casualty Insurance Company, as subrogee, brings this action against Grohe Canada, Inc. Allstate claims that Grohe Canada designed, manufactured, and/or sold a defective valve (known as the “Tempress II”) that was a component in a shower valve assembly installed in the home of its insured. That valve allegedly failed, the insured's home flooded, and, pursuant to its contractual obligations under an insurance policy with the insured, Allstate paid nearly $300, 000 to cover the damages. Allstate seeks to recover that money, plus interest, and costs of this action. In its complaint, Allstate advances three claims against Grohe Canada: negligence, strict product liability, and breach of warranty. It asserts that the court may properly exercise subject matter jurisdiction pursuant to 28 U.S.C. § 1332 (diversity of the parties).

         Grohe Canada counters that this is an inappropriate forum in which to address the merits of Allstate's claims because this court lacks personal jurisdiction over it. Accordingly, Grohe Canada moves to dismiss all of Allstate's claims. Allstate objects. Should the court conclude that it lacks personal jurisdiction over Grohe Canada, Allstate asks the court to transfer this suit to the United States District Court for the Central District of California. See generally 28 U.S.C. § 1631.

         For the reasons discussed, Grohe Canada's motion to dismiss is granted, without prejudice. Allstate's motion to transfer is denied.

         Standard of Review

         The constitutional principles governing this court's exercise of personal jurisdiction over a non-consenting defendant are well-established and need not be recounted in detail. See generally D'Jamoos v. Atlas Aircraft Center, Inc., 669 F.Supp.2d 167 (D.N.H. 2009). It is sufficient to note the following: First, Allstate invokes this court's specific (rather than general) personal jurisdiction over Grohe Canada. Additionally, the parties have, by agreement, engaged in jurisdictional discovery, but neither has requested an evidentiary hearing. Accordingly, Allstate bears the burden of making a prima facie showing, based upon specific facts set forth in the record, that Grohe Canada has “certain minimum contacts with [New Hampshire] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice, ” Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (citation and internal punctuation omitted), and that Grohe Canada's conduct bears such a “substantial connection with the forum State” that it “should reasonably anticipate being haled into court” here, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473-75 (1985) (citing WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

         To carry its burden, Allstate must satisfy a three-part test articulated by the court of appeals.

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's instate contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir. 1992). An affirmative finding as to each of those three elements - relatedness, purposeful availment, and reasonableness - is necessary to support the court's exercise of personal jurisdiction over a defendant. See Phillips Exeter Academy v. Howard Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999).

         Parenthetically, the court notes that the New Hampshire individual long-arm statute, N.H. Rev. Stat. Ann. (“RSA”) 510:4, provides jurisdiction over foreign defendants “to the full extent that the statutory language and due process will allow.” Phelps v. Kingston, 130 N.H. 166, 171 (1987). Likewise, New Hampshire's corporate long-arm statute, RSA 293-A:15.10, authorizes jurisdiction over foreign corporations and unregistered professional associations to the full extent permitted by federal law. See Sawtelle v. Farrell, 70 F.3d 1381, 1388 (1st Cir. 1995). Stated another way, New Hampshire's individual and corporate long-arm statutes are coextensive with the outer limits of due process protection under the federal constitution. Accordingly, the court need only determine whether the exercise of personal jurisdiction over a foreign defendant would comport with federal constitutional guarantees.

         With those principles in mind, the court turns to Grohe Canada's motion to dismiss, as well as Allstate's motion to transfer this action pursuant to 28 U.S.C. § 1631.

         Discussion

         I. Grohe Canada's Motion to Dismiss.

         Based upon the undisputed evidence of record, the relevant facts - at least as they relate to this court's exercise of personal jurisdiction over Grohe Canada - are as follows. Grohe Canada is a foreign corporation with a principal place of business in Mississauga, Ontario, Canada. It has never been licensed, registered, or otherwise authorized to do business in New Hampshire. It does not have a registered agent for service of process in New Hampshire. It has never owned or leased any property in New Hampshire, nor has it ever employed anyone in New Hampshire or maintained an office in New Hampshire. Grohe Canada has no bank accounts in New Hampshire, nor has it ever maintained a New Hampshire phone number. Grohe Canada never sold, distributed, or delivered any products directly to any customer in New Hampshire. Grohe Canada did not design, test, build, repair, service, or inspect the valve at issue in this case in New Hampshire - if any of that occurred, it would have happened in either Ontario, Canada, or at one of Grohe's suppliers in China.

         Grohe Canada sold valve components to several Original Equipment Manufacturers (OEMs) in the United States, none of which are located in New Hampshire. Those OEMs then incorporated Grohe Canada's valves into their products, which were subsequently sold to end users and retailers in the United States. Grohe Canada did not have any input into, or control over, where those OEMs' products were ultimately sold. Grohe Canada did not design the valve at issue to comply with any New Hampshire-specific code or regulatory requirements. Grohe Canada did not advertise its products in New Hampshire, nor did it conduct any marketing efforts in New Hampshire. See generally Affidavit of Herb Barnhart (document no. 11-2).

         In support of its assertion that the court may properly exercise personal jurisdiction over Grohe Canada, Allstate says the following:

1. The “relatedness” element of the jurisdictional inquiry is met because, “there is no dispute that the Subject Valve was ultimately used in New Hampshire. While Defendant did not sell the Subject Valve directly to a New Hampshire-based customer, Defendant sold its products to multiple United States-based entities.” Plaintiff's Memorandum (document no. 22) at 4 (emphasis supplied);
2. The “purposeful availment” element is met because “Defendant purposefully and voluntarily sold its products to multiple United States-based entities. One of those products, the Subject Valve, was ultimately used in New Hampshire. While Defendant did not purposefully target New Hampshire for the sale of its products, . . . . the Subject Valve being used in New Hampshire was a foreseeable result of Defendant selling its products to multiple U.S.-based customers.” Id. (emphasis supplied); and, finally,
3. It would be fair and reasonable to require Grohe Canada to litigate in this forum because “Defendant's burden of appearing in New Hampshire will be minimal. Defendant has retained counsel in New Hampshire. Plaintiff is happy to travel to wherever Defendant's representatives are located for purposes of depositions. New Hampshire has an interest in adjudicating this dispute, which arose within New Hampshire's borders and injured a New Hampshire homeowner. Plaintiff is certainly interested in obtaining convenient and effective relief in New Hampshire.” Id. at 5.

         All of that seems to be little more than an argument that Grohe Canada introduced the allegedly defective Tempress II valve into the American stream of commerce and knew (or should have known) that its product might, some day, end up in New Hampshire. That is plainly an insufficient basis upon which this court might properly rest the exercise of personal jurisdiction over Grohe Canada.

         More than thirty years ago, the Supreme Court held that merely introducing a product into the “stream of commerce” is, standing alone, insufficient to support the ...


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