Boyce v. Cycle Spectrum, Inc.

148 F.Supp.3d 256

Timothy Boyce and Courtney Boyce,

v.Cycle Spectrum, Inc., AZ Velo Imports, Inc., CS Velo AZ Inc., AZ Desert Velo, Inc., CS Bike, Inc., CS Velo HT, Inc., Velo BDBI Support, Inc., Cycle Support, Inc., Spratt Cycle Support, Inc., Windsor America Corporation, HL Corp (USA), Global Velo, Inc., and Advanced Sports, Inc., Defendants.

Advanced Sports, Inc., First Third–Party Plaintiff,

v.Ideal Bike Corporation, Top Sport International Ltd and HL Corp. (Shenzhen), First Third–Party Defendants.

Velo BDBI Support, Inc. and Spratt Cycle Support, Inc., Second Third–Party Plaintiffs,

v.Ideal Bike Corporation, Top Sport International Ltd and HL Corp. (Shenzhen), Second Third–Party Defendants.

14–CV–1163

United States District Court, E.D. New York.

Signed December 8, 2015

Gary A. Zucker, Zucker & Bennett, P.C, Brooklyn, NY, for Plaintiffs.

Alice Spitz, Oisin Lambe, Molod Spitz & Desantis, P.C., Richard H. Bakalor, Quirk & Bakalor, New York, NY, Stephanie M. Mazzotta, Quirk and Bakalor, P.C., Garden City, NY, for First Third–Party Plaintiff.

Angelantonio Bianchi, Cohen Kuhn & Associates, New York, NY, for Second Third–Party Plaintiffs/Defendants.

Paul E. Svensson, Hodges, Walsh, Messemer & Moroknek, LLP, White Plains, NY, for First Third–Party Defendants/Second Third–Party Defendants.

MEMORANDUM & ORDER

Jack B. Weinstein, Senior United States District Judge:

Table of Contents

I. Introduction... 259

II. Facts... 260

A. Parties... 260

B. The handle bar's path from manufacture to plaintiff... 261

C. Procedural History... 262

III. Law... 263

A. Pleading Burden... 263

B. Personal Jurisdiction... 263

1. New York General Jurisdiction... 264

2. New York Long–Arm Statute... 264

a) N.Y. C.P.L.R. § 302(a)(1)... 265

b) N.Y. C.P.L.R. § 302(a)(2)... 265

c) N.Y. C.P.L.R. § 302(a)(3)... 265

3. Due Process... 266

a) Minimum Contacts... 266

b) Reasonableness... 267

IV. Application of Law to Facts... 268

A. General Jurisdiction... 268

B. Specific Jurisdiction... 268

1. C.P.L.R. § 302(a)(1)... 268

2. C.P.L.R. § 302(a)(2)... 270

3. C.P.L.R. § 302(a)(3)... 270

V. Due Process... 270

VI. Conclusion... 270

I. Introduction

This case illustrates the extensive internationalization of the production of consumer goods and some of the jurisdictional problems that exist in compensating for harms to consumers all over the world. Complexities are increased where the path a product takes between suppliers and customers is indirect, with intervening persons communicating by e-mail, internet, and other electronic devices of the modern world linked through satellites and transoceanic undersea cables.

The injured consumer should be entitled, where possible, to sue for damages in his or her local court, rather than a distant forum. See, e.g., Essay, Mass Tort Jurisdiction and Choice of Law in a Multinational World Communicating by Extraterrestrial Satellites, 37 Willamette L.Rev. 145, 146–51 (Winter 2001) (discussing need for availability of jurisdiction, venue, and choice of law based on national contacts). The defendant manufacturer is more likely to be able to afford travel to plaintiff's venue. And, in any event, modern video and other devices make presence in another venue much less burdensome to the well-to-do. See Flores v. United States, 142 F.Supp.3d 279, 287–88, No. 14–CV–3166, 2015 WL 6737744, at *5 (E.D.N.Y. Nov. 4, 2015) (discussing the availability of video conference technology in reducing the burden on witnesses located away from the courthouse).

To the extent that changes in the basis for personal jurisdiction are frozen by the Constitution, international treaties may provide an escape to a more flexible and rational modern approach. Compare Asahi Metal Indus. Co. v.Super. Ct. of Cal., Solano Cty., 480 U.S. 102, 108, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (“The Due Process Clause of the Fourteenth Amendment limits the power of a state court to exert personal jurisdiction over a nonresident defendant.”) with The Trans–Pacific Partnership, art. 28.4 (2015), https://ustr.gov/sites/default/files/TPP-Final-Text-Dispute-Settlement.pdf (“Where a dispute regarding any matter arises under this Agreement and under another international trade agreement to which disputing parties are party, including the WTO Agreement, the complaining Party may select the forum in which to settle the dispute.”); J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 131 S.Ct. 2780, 2800–01, 180 L.Ed.2d 765 (2011) (Ginsburg, J. [formerly professor and author on civil procedure and jurisdiction], dissenting) (examining case in which manufacturer “dealt with the United States as a single market,” opining as follows: “The modern approach to jurisdiction over corporations and other legal entities, ushered in by International Shoe, gave prime place to reason and fairness. Is it not fair and reasonable, given the mode of trading of which this case is an example, to require the international seller to defend at the place its products cause injury?”) (emphasis added).

The underlying claim in this case is that a bicycle handle bar was defectively manufactured, causing it to break and cause injuries when the bicycle's rider, plaintiff Timothy Boyce, lost control of the bicycle and fell to the ground. The instant motion is brought by third-party defendant HL Corp. (Shenzhen) (“HL Corp.”), a company based in China with no direct New York contacts. It was impleaded by three defendants through two separate third-party complaints. All three impleading defendants seek contribution and indemnification from HL Corp. HL Corp moves pursuant to Federal Rule 12(b)(2) to dismiss both third-party complaints for lack of personal jurisdiction.

Although the economic realities of the world have changed significantly since the Supreme Court's modern jurisdictional jurisprudence was announced, until the Supreme Court rules otherwise, this court is bound by those holdings. There is presently no statutory or constitutional basis to exercise personal jurisdiction over HL Corp.

II. Facts

A. Parties

Plaintiffs Timothy and Courtney Boyce are residents of New York. The defendants and their primary locations are:

• Defendant/Third–Party Plaintiff Velo BDBI Support Inc.: Texas

• Defendant/Third–Party Plaintiff Advanced Sports, Inc.: Pennsylvania

• Defendant/Third–Party Plaintiff Spratt Cycle Support, Inc.: Florida • Defendant Windsor America Corp.: Delaware

• Third–Party Defendant Ideal Bike Corporation: Taiwan

• Third–Party Defendant Top Sport International Ltd.: Taiwan

• Third–Party Defendant/Movant HL Corp. (Shenzhen): China

HL Corp. is a Chinese corporation with its principle place of business in China. Hr'g Tr., Nov. 20, 2015 (“Hr'g Tr.”), at 8:6–9. It manufactures and sells rehabilitation equipment, sports equipment, and bicycle parts. Its annual revenue is approximately $150 million. Id. at 24:19–22. Approximately one-third of this revenue comes from the sale of bicycle handle bars; HL Corp. is known as one of the world's leading manufacturers of this product. Id. at 18:22–25; 24:23–25:3. HL Corp.'s recent annual revenue from direct sales to the United States totaled $6,100; no sale was made to a consumer in New York. Id. at 26:3–14.

B. The handle bar's path from manufacture to plaintiff

The bicycle handle bar at issue in this case was manufactured by HL Corp. in China. Id. at 8:3–6. HL Corp. sold the handle bar to Ideal Bike Corporation (“Ideal”) in Taiwan. Id. at 8:11–21. It had no knowledge of where the bicycle handle bar went after delivering it to Ideal. Id. at 10:15–20.

Ideal received an order from Advanced Sports, Inc. (“Advanced Sports”), which placed the order on behalf of its customer, Spratt Cycle Support, Inc. (“Spratt”). The order identified the specifications of the handle bars it was buying and of other component parts. Ideal had the handle bars transferred, along with the other ordered bicycle parts, to an affiliated company in Taiwan. The affiliated company, which is not named in this action, partially assembled the bicycles and placed them in boxes with the handle bars. The handle bars were not attached to the partially-assembled bicycles. The boxes also contained an instruction manual that was written and then sent electronically by Advanced Sports to Ideal in Taiwan, where it was printed. The boxes containing the partially-assembled bicycles, handle bars, and instructions for assembly were then sent to Spratt in Florida. Id. at 8:22–11:7.

Advanced Sports was the importer of record and was responsible for paying applicable customs duties. Id. at 16:8–18:6. In 2010, Advanced Sports sold approximately 8,600 bicycles in New York. This number grew to 256,970 in 2015.85,998 of the bicycles Advances Sports sold in New York in 2015 had handle bars which were manufactured by HL Corp. Letter from Alice Spitz, Dec. 4, 2015, ECF No. 141.

Spratt, which does business through the website www.bikesdirect.com, sent the box to plaintiff, who had ordered it from his computer in New York via Spratt's website. Spratt did not open the box it had received from Taiwan before it shipped the box to plaintiff in New York. Hr'g Tr. at 11:11–12:2.

Defendant/Third–Party Plaintiff Velo BDBI Support Inc. (“Velo”) owns the www.bikesdirect.com website used by plaintiff, and is part of the same corporate group as Spratt. Id. at 14:2–25.

Plaintiff received the box in New York, where he assembled the bicycle. Following the directions provided in the box and a video on Spratt's website, plaintiff attached the handle bar to the bicycle using an Allen wrench placed in the box in Taiwan. Id. at 19:11–20:23; 22:8–24:23.

On July 9, 2012, approximately two years after receiving the bicycle, plaintiff Timothy Boyce was riding it on the Manhattan Bridge. 2d Amended Compl., June 26, 2015, ECF No. 97, at ¶ 68. Plaintiff alleges that the handle bar of the bike suddenly fractured and broke into two pieces, causing him to lose control and fall to the ground. Id. at ¶¶ 69–70. There had been no problem with the handle bar before this. No history has been developed of prior breaks...