Shelter Mut. Ins. Co. v. Bissell Homecare, Inc.

SHELTER MUTUAL INSURANCE COMPANY,a/s/o FREDDIE AND AMBER HOARD, Plaintiff, v. BISSELL HOMECARE, INC., et al., Defendants.

NO. 3:20-cv-00813

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

April 28, 2021

JUDGE RICHARDSON

MEMORANDUM OPINION

Pending before the Court is a Motion to Dismiss¹ filed by Specially-Appearing Defendant LG Chem America, Inc. ("Defendant LG Chem") for lack of personal jurisdiction (Doc. No. 23, "Motion"). Plaintiff has responded. (Doc. No. 32). Defendant has replied. (Doc. No. 34). The Motion is ripe for review.

For the reasons discussed herein, the Court will grant Defendant LG Chem's Motion.

BACKGROUND²

On November 21, 2017, a Bissell Bolt Lithium Pet Cordless Bagless Stick Vacuum catastrophically failed, caused a fire, and burned down the home of Freddie and Amber Hoard("the insured"). (Doc. No. 1 at ¶ 15). The Lithium Ion Batteries used in the Bissell Vacuum are subject to "thermal runaway," an event where the internal battery temperature can increase and cause the battery to ignite or explode due to defective design or manufacture. (Id. at ¶ 17). By October 2014, all Defendants had received notices of concern regarding the use of these batteries. (Id. at ¶ 19).

LG Chem, Ltd., a South Korean company and the entity that manufactured the subject battery that caused the fire, is not subject to the jurisdiction of this Court. (Id. at ¶¶ 5, 6). Defendant LG Chem is a wholly owned subsidiary of LG Chem, Ltd. (Id. at ¶ 7). Plaintiff alleges that "[a]t all times relevant to this lawsuit, LG Chem America, either directly or through its wholly-owned subsidiaries, designed, tested, manufactured, advertised, sold, and/or distributed Lithium Ion Batteries throughout the United States, and directly caused Lithium Ion Batteries to be imported into the United States, including Tennessee . . ." (Id.).³ Plaintiff also includes several paragraphs aimed at establishing jurisdiction that refer generally to all Defendants:

• Defendants, through their actions and those of any affiliated/parent/subsidiary companies and agents, do and did at all times relevant conduct substantial business in Tennessee by purposefully causing their products, including the Bissell Bolt Lithium Pet Cordless Bagless Stick Vacuum and Lithium Ion Batteries, to be marketed, distributed, sold and used within Tennessee.

• Defendants, do and did at all times relevant, derive significant revenue from its activities and the sale/use of their products in Tennessee.

• Defendants, have additionally caused Shelter-insureds Freddie and Amber Hoard, citizens of Tennessee, to suffer damage to real and personal property as a result of at least one tortious act or omission.

• Thus, through their actions, Defendants do or should reasonably anticipate being hailed into a Tennessee court and have thereby consented specifically to the jurisdiction of this Court. Defendants are thus subject to personal jurisdiction in this Court pursuant to T.C.A. §§ 20-2-214, 20-2-223 and 20-2-225.

(Id. at ¶¶ 9-12).

The Complaint asserts several counts against various Defendants, namely Bissell Homecare, Inc., Bissell, Inc., Flextronics International USA, Inc., and LG Chem America, Inc. The following counts pertain to the movant Defendant LG Chem: Count I for strict liability, Count II for negligence, Count III for breach of express warranty, and Count IV for breach of implied warranty of merchantability.

To support its Motion, Defendant LG Chem submitted the Declaration of Hyunsoo Kim, the Compliance Manager and authorized representative for Defendant LG Chem. (Doc. No. 24-1, "Defendant LG Chem's Declaration"). Defendant LG Chem's Declaration states that Defendant LG Chem is a Delaware corporation with its principal place of business in Atlanta, Georgia. (Id. at ¶ 3). It is registered to do business in Tennessee and has a registered agent for the service of process in Tennessee. (Id. at ¶ 4). Defendant LG Chem primarily sells and distributes various petrochemical materials and products, such as ABS resin, Engineered Plastics, etc. (Id. at ¶ 10). Defendant LG Chem does not have any manufacturing plants, and it focuses on sales and distribution only. (Id.). As it does not have any manufacturing plants, the battery could not have been manufactured by Defendant LG Chem. (Id. at ¶ 11). Defendant LG Chem has never sold, marketed, or distributed the batteries to individual consumers for use with the relevant vacuum.(Id. at ¶ 12). Defendant LG Chem did not conduct business with the insureds, and it did not sell or distribute batteries to the other Defendants. (Id. at ¶¶ 13-14). Defendant LG Chem did not distribute or sell the subject battery in Tennessee. (Id. at ¶ 19). Defendant LG Chem's sales in Tennessee are exclusively limited to petrochemical materials and products, and it does not generate any other revenue in Tennessee. (Id. at ¶ 16). Defendant LG Chem's petrochemical materials and products that are sold in Tennessee comprise about 2.52% of Defendant LG Chem's sales. (Id. at ¶¶ 17, 18).

LEGAL STANDARD

A. Standard of Review: Personal Jurisdiction

Defendant LG Chem filed its motion pursuant to Fed. R. Civ. P. 12(b)(2), which provides for dismissal of a claim for "lack of personal jurisdiction." A plaintiff bears the burden of establishing personal jurisdiction. Elcan v. FP Assocs. LTD, Case No. 3:19-cv-01146, 2020 WL 2769993, at *3 (M.D. Tenn. May 28, 2020). On a 12(b)(2) motion to dismiss, district courts have discretion to either decide the motion on affidavits alone, permit discovery on the issue, or conduct an evidentiary hearing.⁴ Id. (citing Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). Where, as here, the court rules without conducting an evidentiary hearing,⁵ the plaintiff's burden of proof is "relatively slight." Id. (citing MAG IAS Holdings, Inc. v. Schmückle, 854 F.3d 894, 899 (6th Cir. 2017)).

Nevertheless, ""[i]n response to a motion to dismiss, the plaintiff may not stand on his pleadings, but must show the specific facts demonstrating that the court has jurisdiction." Ramsey v. Greenbush Logistics, Inc., 263 F. Supp. 3d 672, 676 (M.D. Tenn. 2017) (quoting Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012)). "In other words, a 'plaintiff may not simply rest on the bare allegations of the complaint. But uncontroverted allegations must be taken as true, and conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor.'" Johansen v. HomeAdvisor, Inc., 218 F. Supp. 3d 577, 583 (S.D. Ohio 2016) (quoting Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015)).

Moreover, when a district court rules on a motion to dismiss under Rule 12(b)(2) without conducting an evidentiary hearing, the court must consider the pleadings and affidavits in a light most favorable to the plaintiff. Elcan, 2020 WL 2769993, at *3. The Sixth Circuit has held that a court disposing of a Rule 12(b)(2) motion without an evidentiary hearing should not weigh the controverting assertions of the party seeking dismissal, because "we want to prevent non-resident defendants from regularly avoiding personal jurisdiction simply by filing an affidavit denying all jurisdictional facts." CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996) (citation and quotation marks omitted), cited in Elcan, 2020 WL 2769993, at *3. "Dismissal in this procedural posture is proper only if all the specific facts which the plaintiff . . . alleges collectively fail to state a prima facie case for jurisdiction." Id. "In this procedural posture [without an evidentiary hearing], the court does not weigh the facts disputed by the parties but may consider the defendant's undisputed factual assertions." Camps v. Gore Capital, LLC, No. 3:17-cv-1039, 2019 WL 2763902, at *4 (M.D. Tenn. July 2, 2019).

It is not necessarily easy to reconcile all of the above-referenced rules with one another, because, at least superficially, they could be understood to say different things about the extent towhich the district court must accept as true the allegations of the complaint. But the Court believes that they can be reconciled. And the upshot seems to be this: in opposing a motion to dismiss for lack of personal jurisdiction, a plaintiff cannot rely on mere allegations in the complaint, unless they are uncontroverted by the defendant-movant—in which case they can be accepted as true, as can the averments in the plaintiff's declarations (even if contradicted) and the defendant's undisputed factual assertions.

Because there has been no evidentiary hearing with regard to Defendant LG Chem's Motion, and the Court will deny Plaintiff's request for jurisdictional discovery as discussed below, the Court will determine whether Plaintiff has demonstrated personal jurisdiction over Defendant LG Chem under a prima facie standard, rather than the heavier preponderance of the evidence standard. Camps, 2019 WL 2763902, at **4-5. " 'A prima facie showing means that the plaintiff has produced admissible evidence, which if believed, is sufficient to establish the existence of personal jurisdiction.' " Reyes v. Freedom Smokes, Inc., No. 5:19-CV-2695, 2020 WL 1677480, at *2 (N.D. Ohio Apr. 6, 2020) (quoting Death v. Mabry, No. C18-5444 RBL, 2018 WL 6571148, at *2 (W.D. Wash. Dec. 13, 2018)).

In a diversity case such as this one, a plaintiff must satisfy the state-law requirements for personal jurisdiction. Camps, 2019 WL 2763902, at *5; Bulso v. O'Shea, No. 3-16-0040, 2017 WL 563940, at *1 (M.D. Tenn. Feb. 13, 2017) ("Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons."), aff'd sub nom. Bulso v. O'Shea, 730 F. App'x 347 (6th Cir. 2018). Tennessee law (its so-called "long-arm" statute) authorizes its courts to exercise jurisdiction over persons on "any basis not inconsistent with the constitution of this state or of the United States." Bulso, 2017 WL 563940, at *1(citing Tenn....