Boustred v. Align Corp.

410 P.3d 640

Allister Mark BOUSTRED, Plaintiff–Appellee,andHorizon Hobby, Inc., Defendant–Appellee,

v.ALIGN CORPORATION LIMITED, Defendant–Appellant.

Court of Appeals No. 15CA1869

Colorado Court of Appeals, Div. A.

Announced April 21, 2016

Keating Wagner Polidori Free, P.C., Michael O'B. Keating, Deirdre E. Ostrowski, Melissa A. Hailey, Denver, Colorado, for Plaintiff–Appellee.

Hall & Evans, LLC, Kenneth H. Lyman, Ryan L. Winter, Connor P. Boyle, Denver, Colorado, for Defendant–Appellee.

The Waltz Law Firm, Richard A. Waltz, Christopher R. Reeves, Denver, Colorado, for Defendant–Appellant.

Opinion by JUDGE FOX

¶ 1 In this interlocutory appeal, defendant Align Corporation Limited (Align) appeals the trial court's order denying its C.R.C.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction. We accepted Align's C.A.R. 4.2 petition to address the effect of the United States Supreme Court's plurality opinion in J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011), on Colorado's personal jurisdiction framework under Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187 (Colo.2005). The Colorado Supreme Court has yet to directly address, after the J. McIntyre decision, the proper test to be applied when evaluating specific jurisdiction based on a stream of commerce theory.

¶ 2 We conclude that Justice Breyer's concurrence in the judgment in J. McIntyre —relying on the stream of commerce theory articulated in the United States Supreme Court's majority opinion in World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) —constitutes the Court's holding and guides our evaluation of the specific jurisdiction question posed here. We further conclude that Archangel remains precedential authority in the wake of J. McIntyre, and consequently, we affirm the trial court's denial of Align's motion to dismiss.

I. Background

¶ 3 Align is a Taiwanese company that manufactures and sells remote control helicopters and related parts. Align has no physical corporate presence in the United States, but it engages distributors in the United States who sell Align's products to retailers who, in turn, sell the products to consumers. When the incident at issue here arose, Align had engaged four distributors in the United States: defendant Horizon Hobby, Inc. (Horizon); Assurance Services, Inc.; Heli Wholesaler, Inc.; and GrandRC, LLC.

¶ 4 Plaintiff, Allister Mark Boustred, purchased a remote control T–Rex 450SA ARF model helicopter manufactured by Align. Boustred later purchased a main rotor holder, the part that attaches the main rotor to the helicopter, from Hobby Town Unlimited, Inc., a retail store in Fort Collins, Colorado. Align manufactured the main rotor holder, and Horizon—which has an exclusive distribution agreement with Align for the T–Rex 450SA ARF model helicopters—distributed it. Boustred alleges that the main rotor holder broke during testing and caused the main rotor to release and strike him, resulting in the loss of an eye.

¶ 5 Boustred filed strict product liability and negligence claims against Align and Horizon, among others, in Larimer County alleging that the main rotor holder allegedly malfunctioned. After Boustred served Align in Taiwan, Align asked the trial court to quash service and dismiss all claims against it for lack of personal jurisdiction under C.R.C.P. 12(b)(2). The trial court found that, under Archangel, it could assert specific jurisdiction over Align, and denied the motion.

¶ 6 Later, the trial court granted Align's motion for certification pursuant to C.A.R. 4.2. We accepted the appeal.

II. Personal Jurisdiction

A. Standard of Review

¶ 7 Whether a trial court has jurisdiction is a question of law that we review de novo. Giduck v. Niblett, 2014 COA 86, ¶ 11, 408 P.3d 856. We also review de novo a trial court's ruling on a motion to dismiss. Id.

B. Legal Principles of Specific Jurisdiction

¶ 8 A plaintiff seeking to invoke a Colorado court's jurisdiction over a nonresident must comply with the requirements of Colorado's long-arm statute and constitutional due process. Archangel, 123 P.3d at 1193. The General Assembly intended Colorado's long-arm statute to confer the maximum jurisdiction allowable by the Due Process Clauses of the United States and Colorado Constitutions. Id. ; see § 13–1–124, C.R.S. 2015. Because our constitutional due process analysis necessarily addresses the requirements of Colorado's long-arm statute, we need not separately address them. Archangel, 123 P.3d at 1193.

¶ 9 To meet the requirements of due process, a defendant must have sufficient minimum contacts with the forum state so that the defendant may reasonably foresee being answerable in court there. Id. at 1194 ; see also Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The quantity and nature of the required minimum contacts depend on whether the plaintiff alleges general or specific jurisdiction. Archangel, 123 P.3d at 1194. Here, because Boustred's complaint only alleges that the trial court had specific jurisdiction over Align, we need not address general jurisdiction.

¶ 10 Specific jurisdiction exists when the alleged injuries resulting in litigation arise out of and are related to a defendant's activities that are significant and purposefully directed at residents of the forum state. Id. ; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). As a result, evaluating sufficient minimum contacts for specific jurisdiction involves a two-part test, assessing (1) whether the defendant purposefully availed itself of the privilege of conducting business in the forum state, and (2) whether the litigation arises out of the defendant's forum-related contacts. Archangel, 123 P.3d at 1194. The first prong—purposeful availment—precludes personal jurisdiction resulting from random, fortuitous, or attenuated contacts. Id. The second prong—the "arising out of" requirement—tests the relationship between the defendant's actions giving rise to the litigation and the forum state. Id.

¶ 11 Once a plaintiff establishes that a defendant has the requisite minimum contacts with the forum state, the next inquiry involves a determination of whether a court's exercise of personal jurisdiction over the defendant is reasonable and comports with notions of fair play and substantial justice. Id. at 1194–95 ; see also Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154. According to Align, merely placing a product into the stream of commerce, without more, is insufficient for a Colorado court to assert personal jurisdiction. Boustred and Horizon disagree.

C. Stream of Commerce Jurisprudence

¶ 12 In World–Wide Volkswagen, the Supreme Court held that a "forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." 444 U.S. at 297–98, 100 S.Ct. 559. The Court noted that when the sale of a product results from efforts of a manufacturer or distributor to serve, directly or indirectly, the market for its product in other states, it is not unreasonable to subject that manufacturer or distributor to suit in one of those states when the product causes injury there. Id. at 297, 100 S.Ct. 559.

¶ 13 Since World–Wide Volkswagen established the stream of commerce theory, United States Supreme Court justices have provided competing versions of the scope of the theory in plurality decisions. For example, in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 109, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion), Justice O'Connor, writing for the plurality, dismissed a broad interpretation of World–Wide Volkswagen 's stream of commerce theory. Asahi, 480 U.S. at 110–11, 107 S.Ct. 1026. Justice O'Connor's plurality opinion adopted a stricter interpretation of the stream of commerce theory:

The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State.... But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.

Id. at 112, 107 S.Ct. 1026.

¶ 14 Justice Brennan, joined by three other justices, concurred in the Court's judgment but refused to accept Justice O'Connor's more stringent interpretation of the stream of commerce theory. Id. at 116, 107 S.Ct. 1026. Justice Brennan's concurrence opined that the stream of commerce does not refer to an unpredictable current which sweeps a product further than reasonably foreseeable, but instead, it consists of a "regular and anticipated flow of products from manufacture to distribution to retail sale." Id. at 117, 107 S.Ct. 1026 (Brennan, J., concurring in part and concurring in the judgment). Additionally, a defendant who places goods into the stream of commerce "benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity." Id. (Brennan, J., concurring in part and concurring in the judgment). Justice Brennan noted that World–Wide Volkswagen carefully differentiated between a good reaching a forum due to a distribution chain versus the unilateral act of a consumer and concluded that World–Wide Volkswagen 's articulation of the stream of commerce theory should not be altered. Id. at 120–21, 107 S.Ct. 1026 (Brennan, J., concurring in part and concurring in the judgment).

¶ 15 Most recently, a similarly divided court re-evaluated the stream of commerce approach to specific personal jurisdiction in J. McIntyre, 564...