Hahn v. Costway LLC

MARNIE HAHN, et al., Plaintiffs, v. COSTWAY LLC, et al., Defendants.

Case No. 20-12396

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN NORTHERN DIVISION

November 6, 2020

Honorable Thomas L. Ludington

OPINION AND ORDER GRANTING DEFENDANT WEI WU'S MOTION TO DISMISS

On May 5, 2020 Plaintiffs Marnie and Richard Hahn filed a complaint in the Alpena County Circuit Court against Defendants Costway LLC, Costway.com, Inc., Giantex, Inc., Goplus Corporation, and Wei Wu. ECF No. 1-2. Defendants Costway LLC, Costway.com Inc., Giantex, Inc., and Goplus Corporation are all organized under California law. Id. at PageID.13. Plaintiff alleges that "Defendant Wei Wu . . . is a citizen of the State of California and is an owner of Defendants COSTWAY and maintains business offices . . . [in] Ontario [and Fontana], California." Id. at PageID.13-14. Plaintiff alleges that she was injured on March 18, 2018 when a "Costway 7 Height Adjustable Bath Shower Chair Medical Seat Stool . . . . collapsed causing her to fall and suffer traumatic, permanent injuries." Id. at PageID.14-15. Plaintiff alleges that Costway sold the chair to the Wal-Mart located in Alpena County, Michigan. Id. at PageID.14. The Complaint does allege any fact that would justify disregarding Defendant Wei Wu's limited liability as an owner of the Defendant entities.

On September 2, 2020, Defendants removed the case to this Court based on diversity jurisdiction. ECF No. 1. On September 9, 2020 Defendants Costway LLC, Costway.com Inc., Giantex, Inc., and GoPlus Corp. filed an answer. ECF No. 10. The same day, Defendant Wei Wu filed a motion to dismiss for lack of personal jurisdiction and insufficient service of process. ECF No. 11. The response and reply were timely filed.

I.

A.

Federal Rule of Civil Procedure 12(b)(2) states that "Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion: . . . lack of personal jurisdiction." A plaintiff bears the burden of establishing personal jurisdiction. See Brunner v. Hampson, 441 F.3d 457, 462 (6th Cir. 2006). "[I]n the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleading but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction." Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 449 (6th Cir. 2012) (quoting Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)).

"Presented with a properly supported 12(b)(2) motion and opposition, the court has three procedural alternatives: it may decide the motion upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions." Theunissen, 935 F.2d at 1458. When a district court does not conduct an evidentiary hearing, but instead rules solely on written submissions, the plaintiff's burden is relatively slight: the plaintiff "must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal." Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 367, 360 (6th Cir. 2008) (quoting Theunissen, 935 F.2d at 1458). In such a case, a court "will not consider facts proffered by the defendant that conflict with those offered by the plaintiff, and will construe the facts in a light most favorable to the nonmoving party." Indah v. U.S. S.E.C., 661 F.3d 914, 920 (6th Cir. 2011) (internal quotations and citationomitted); see also Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007). However, "mere 'bare bones' assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations will not satisfy a plaintiff's pleading burden." Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir.2007); Odish v. Peregrine Semiconductor, Inc., 2015 WL 1119951 at *9. "Because weighing any controverted facts is inappropriate at this stage, dismissal is proper only if [the plaintiff's] alleged facts collectively fail to state a prima facie case for jurisdiction." Carrier Corp., 673 F.3d at 449 (internal quotations and citation omitted).

As explained by the Sixth Circuit,

To exercise jurisdiction over an out-of-state individual, a federal court must satisfy the long-arm law of the state as well as federal due process. Miller v. AXA Winterthur Ins., 694 F.3d 675, 679 (6th Cir. 2012). The Due Process Clause limits a State's power to bind an out-of-state defendant to a judgment of its courts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980). Only if the out-of-state defendant has "minimum contacts" with the State sufficient to accord with "traditional notions of fair play and substantial justice" may the state court exercise power over it. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

A State may invoke two types of personal jurisdiction against a defendant: (1) "general" jurisdiction that is dependent on a defendant's generic connections to the State, such as whether the defendant resides there or regularly does business there, see Daimler AG v. Bauman, 571 U.S. 117, 126 (2014); and (2) "specific," which is dependent on the defendant's case-related contacts to the jurisdiction, see Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985).

Evans v. Brown, 2019 WL 9047225, at *2 (6th Cir. Dec. 6, 2019).

i.

As an initial matter, Defendant argues that because "the only basis Plaintiffs provide for specific jurisdiction over Mr. Wu is Michigan's long-arm statute, MCL § 600.711 and 600.715 [which] apply to corporations, not individuals," Plaintiffs have failed to "establish any personal jurisdiction at all with respect to Mr. Wu" and have waived the argument. ECF No. 11 atPageID.79. The only authority asserted by Defendants for this proposition is In re Trade Partners, Inc. v. Investors Litigation, 627 F. Supp. 2d 772 (W.D. Mich. 2008). In that case, Chief Judge Bell concluded that plaintiffs did not assert § 600.701 or § 600.705 as bases for personal jurisdiction over one defendant and thereby waived those bases for personal jurisdiction. However, Judge Bell did not hold that if the specific basis for personal jurisdiction is not asserted in the complaint, then it is waived. Rather, he generally concluded that because plaintiffs "do not assert" the two statutes, plaintiffs had waived 701 and 705 jurisdiction, without identifying whether he was referring to only the complaint or a response to a motion to dismiss. Therefore, at best, it is unclear whether Judge Bell believed a complaint that failed to specify the correct long-arm statute in the complaint constitutes a waiver. Additionally, when deciding a motion to dismiss based upon FRCP 12(b)(2), a court may consider not only the pleadings, but also affidavits submitted by the parties. Even though Plaintiffs cited the incorrect long-arm statute in their complaint, they correctly cite the jurisdiction statute applicable to individuals in their response brief. Therefore, both general and specific personal jurisdiction will be evaluated.

ii.

General jurisdiction exists when a defendant's contacts with the forum state are of such a continuous and systematic nature that the state may exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant's contacts with the state.

Intera Corp. v. Henderson, 428 F.3d 605, 615 (6th Cir. 2005) (internal quotations and citations omitted). Michigan's long-arm statute for general jurisdiction over an individual provides,

The existence of any of the following relationships between an individual and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise general personal jurisdiction over the individual or his representative and to enable such courts to render personal judgments against the individual or representative.

(1) Presence in the state at the time when process is served.

(2) Domicile in the state at the time when process is served.

(3) Consent, to the extent authorized by the consent and subject to the limitations provided in section 745.

M.C.L. § 600.701.

Defendant argues that he is not subject to general personal jurisdiction in Michigan. He is "a Chinese foreign national who lives in the People's Republic of China" and "does no business in Michigan, has no offices or facilities in Michigan, does not own real estate or pay taxes in Michigan, does not have a mailing address or telephone number in Michigan, and does not employ any employees with an entity headquartered in Michigan." ECF No. 11 at PageID.80. Plaintiffs contend that "this court has both general and specific jurisdiction over Defendant Wei Wu," but their argument and case law focus on specific personal jurisdiction. ECF No. 17 at PageID.108-11. Even though Plaintiffs' burden is slight, they must articulate some basis for their assertion. Plaintiffs have failed to even cite Michigan's general personal jurisdiction statute for individuals, let alone offer an explanation for why Defendant is subject to general jurisdiction in Michigan. He was not present or domiciled in Michigan at the time service of process was attempted.¹ Additionally, Plaintiffs did not provide evidence of, let alone argue, how Defendant consented to general jurisdiction in Michigan. Defendant is not subject to general personal jurisdiction in Michigan.

iii.

"An exercise of specific jurisdiction is proper where the claims in the case arise from or are related to the defendant's contacts with the forum state." Intera Corp., 428 F.3d at 615. "A court's exercise of personal jurisdiction over a nonresident defendant is appropriate only if it meetsthe state's long-arm statute and constitutional due process requirements." Id. Michigan's long arm statue for specific jurisdiction provides

The existence of any of the

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