Friday, November 13, 2009

Personal Jurisdiction Over A Foreign Bicycle Component Part Manufacturer

Bicycle components can and do fail, sometimes causing serious injury to the cyclist. Imagine flying down technical single track and having your stem break. Try to wrap your brain around what it would be like to have your steering tube fail while in a packed peloton. How horrifying to attempt to stop your fixed gear bike in city traffic and your chain breaks. When incidents like these occur causing serious injury a product liability lawsuit may be filed against the manufacturer of the failed component. Such lawsuits offer challenges aplenty to even the most experienced personal injury lawyer. One significant challenge is establishing personal jurisdiction over the manufacturer in Illinois.

Many, if not most, bicycle parts are manufactured overseas, often in Taiwan, China and Japan. That not necessarily a bad thing for the consumer. By my observation a lot of high quality parts are made in Asia, notably Taiwan and Japan. However, for the attorney attempting to haul one of these manufacturers into an Illinois courtroom, a defendant with such a far flung home base may present a challenge. One cannot simply decide to sue someone, whether an individual or corporation, in any old place. There must be some connection between the person or entity being sued and the place where the lawsuit is filed. It is the burden of the person filing the lawsuit, the plaintiff, to establish that the court where the suit is filed has personal jurisdiction over the defendant manufacturer. Without personal jurisdiction a court has no power to render a judgment against the putative defendant. A corporation need not have its headquarters in the state in order to be hauled into court here. A foreign corporation may submit to the jurisdiction of Illinois courts by simply doing some business in the state. 735 ILCS 5/2-209. The corporate defendant must have minimum contacts with the state to be sued here. In March, 2009 the Illinois Appellate Court had the opportunity to determine whether an Illinois trial court had personal jurisdiction over a bicycle component part manufacturer located in Taiwan. In Dickie v. Cannondale Corporation, et. al., 388 Ill.App.3d 903 (1st Dist. 2009), the court found that personal jurisdiction had not been established. The plaintiff in that case had been riding his cyclocross bike with "CODA" clipless pedals, a product of Cannondale Corporation, that were manufactured by Wellgo Corporation when he crashed and was thrown forward over the handlebars. He allegedly suffered injuies to this left hip and leg which twisted because his left foot did not disengage from the pedal. He sued Wellgo in Illinois for negligence in the way it designed and manufactured the pedals. Wellgo moved to have the claim against it dismissed on the basis that it had no minimum contacts with Illinois and that the court, therefore, had no jurisdiction over the corporation. In support of its motion to dismiss, Wellgo submitted an affidavit from its sales director which stated that:

Wellgo is in the business of designing and manufacturing bicycle pedals, including the clipless pedals in the case at bar. Wellgo's pedals are manufactured at a Wellgo facility in Taiching, Taiwan. After being manufactured, the pedals are sold and shipped to Cash Crest Co., and Wellgo has no further involvement with the distribution of the product. . . Wellgo is not licensed, authorized or registered to do business in any state of the United States. It further states that Wellgo, in Illinois, has never sold or shipped products, executed a contract, provided services, paid taxes, possessed assets, maintained a telephone or fax number, employed any individuals, attended trade shows or meetings, advertised, or otherwise solicited business in Illinois. 388 Ill.App.3d at 904-5.

In response, the plaintiff argued "that personal jurisdiction existed over Wellgo under a 'stream of commerce theory'." 388 Ill.App.3d at 905. He asserted that though Wellgo's entire operation was located outside of the United States, it was well "aware that Cannondale was an American company that distributed its products throughout the United States," including Illinois. In other words, Wellgo must have known its products would be marketed and sold in Illinois, thereby establishing minimum contact with the state. The appellate court was unpersuaded by this argument. It noted that "no evidence shows that Wellgo was otherwise aware of specifically where and how Cannondale's products were marketed or sold. Wellgo sold the pedals to Cash Crest Co., a Taiwanese trading company, and from there had no control over or knowledge regarding the distribution of the pedals." Id. at 908. The court also noted that "Wellgo never shipped the subject pedals directly to a distributor in the United States. . . Wellgo has no presence in Illinois." Id. Wellgo's dismissal for lack of personal jurisdiction was, therefore, upheld.

What Illinois lawyers representing injured bicyclists may take away from Dickie is that in order to establish personal jurisdiction over a component part manufacturer, the corporation must have some contact with the state greater than simply releasing its product into the general marketplace. When no such minimum contact exists, however, there is another option. In Illinois, a component part supplier can be held liable for distribution of a dangerous product into the stream of commerce under negligence and strict product liability theories. (A seller may not be held liable under a strict product theory, however.) Lewis v. Lead Industries Ass'n, 342 Ill.App.3d 95 (1st Dist. 2003). It is not clear from reading the Dickie decision whether Cash Crest Co. was added as a defendant to the lawsuit. But it apparently had direct contact with Cannondale thereby perhaps establishing contact with Illinois, where Cannondale certainly does a great deal of business. In any event, an inability to bring a remotely located component part manufacturer into the case does not mean that all is lost.




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