State ex rel. LG Chem, Ltd. v. McLaughlin

599 S.W.3d 899

STATE EX REL. LG CHEM, LTD., Relator,

v.The Honorable Nancy Watkins MCLAUGHLIN, Respondent.

No. SC 97991

Supreme Court of Missouri, en banc.

Opinion issued June 2, 2020

LG Chem was represented by Brian Plegge and Teresa M. Young of Brown & James PC in St. Louis, (314) 421-3400.

Rachel A. Hedley of Nelson Mullins Riley and Scarborouggh LLP in Columbia, South Carolina, (803) 255-5565.

Peter Bishop was represented by John G. Simon and John M. Simon of The Simon Law Firm PC in St. Louis, (314) 241-2929.

W. Brent Powell, Judge LG Chem, Ltd., seeks a writ of prohibition to prohibit the circuit court of St. Louis County from enforcing its order overruling LG Chem's motion to dismiss for lack of personal jurisdiction. Because LG Chem lacks sufficient minimum contacts with the state of Missouri, due process prohibits Missouri courts from asserting personal jurisdiction over LG Chem in this matter. The preliminary writ is made permanent.

Background

LG Chem is a Korean company with its headquarters in Seoul, South Korea. LG Chem manufactures electronic equipment, including model 18650 lithium-ion batteries. One of LG Chem's model 18650 batteries is the subject of the action underlying this writ proceeding.

In the underlying action, Peter Bishop sued LG Chem in the St. Louis County circuit court under a products liability theory, asserting counts in negligence and strict tort liability. Bishop alleged he purchased one of LG Chem's model 18650 batteries from Smoke Smart, LLC, a retailer of electronic cigarettes and accessories located in St. Peters, Missouri, for use in his e-cigarette. Bishop alleged the battery spontaneously exploded in his pocket one day, and, as a result, he suffered burn injuries.

To establish personal jurisdiction over LG Chem, Bishop alleged LG Chem designed, manufactured, sold, and distributed the subject battery. Bishop did not allege LG Chem sold the battery directly to Smoke Smart. Instead, he alleged LG Chem sold the subject battery to an intermediate distributor, which in turn independently sold and shipped the subject battery to Smoke Smart in Missouri. Bishop also alleged LG Chem manufactured a very large number of model 18650 batteries that were sold and distributed into the United States through a third-party distributor. Because of the large number of model 18650 batteries that LG Chem manufactured and sold to a third-party distributor, Bishop alleged LG Chem knew or should have known third parties were distributing its model 18650 batteries to consumers throughout the United States, including consumers in Missouri.

LG Chem filed a motion to dismiss for lack of personal jurisdiction, arguing due process does not permit Missouri courts to exercise personal jurisdiction over LG Chem in this matter. In addition to opposing LG Chem's motion on the merits, Bishop alternatively requested the circuit court order additional jurisdictional discovery if the court determined LG Chem's known contacts with Missouri were insufficient to establish personal jurisdiction. The circuit court overruled LG Chem's motion on the merits without addressing Bishop's alternative request for relief. LG Chem sought a writ of prohibition from the court of appeals, which denied relief. LG Chem then sought a writ of prohibition from this Court. This Court issued a preliminary writ of prohibition, directing the circuit court to show cause why a permanent writ should not issue to prohibit the court from doing anything other than vacating its order overruling LG Chem's motion to dismiss. This Court now makes its preliminary writ permanent and directs the circuit court to vacate its order overruling LG Chem's motion to dismiss.

Standard of Review

Article V, section 4 of the Missouri Constitution "vests this Court with the authority to issue and determine original remedial writs." State ex rel. PPG Indus., Inc. v. McShane , 560 S.W.3d 888, 890 (Mo. banc 2018). Prohibition is a discretionary writ that should issue only "to prevent an abuse of judicial discretion, to avoid irreparable harm to a party, or to prevent exercise of extra-jurisdictional power." State ex rel. Marianist Province of U.S. v. Ross , 258 S.W.3d 809, 810 (Mo. banc 2008). "Prohibition is the proper remedy to prevent further action of the trial court where personal jurisdiction of the defendant is lacking." PPG , 560 S.W.3d at 890 (quoting State ex rel. Norfolk S. Ry. Co. v. Dolan , 512 S.W.3d 41, 45 (Mo. banc 2017) ). However, prohibition is proper only "when usurpation of jurisdiction ... is clearly evident." Norfolk S. Ry. Co. , 512 S.W.3d at 45 (alteration in original) (quoting State ex rel. Tarrasch v. Crow , 622 S.W.2d 928, 937 (Mo. banc 1981) ). Whether the plaintiff made "a prima facie showing that the trial court may exercise personal jurisdiction is a question of law," which "this Court reviews de novo. " Bryant v. Smith Interior Design Grp., Inc. , 310 S.W.3d 227, 231 (Mo. banc 2010).

Analysis

LG Chem seeks a writ of prohibition to bar the circuit court from enforcing its order overruling LG Chem's motion to dismiss for lack of personal jurisdiction. Because LG Chem has no contacts with the state of Missouri other than its product arriving into Missouri through the unilateral action of a third party, LG Chem lacks sufficient minimum contacts with Missouri to satisfy due process. Accordingly, the circuit court lacks personal jurisdiction over LG Chem in this matter.

"Personal jurisdiction is a court's power over the parties in a given case." State ex rel. Key Ins. Co. v. Roldan , 587 S.W.3d 638, 641 (Mo. banc 2019). Personal jurisdiction limitations arise from the defendant's right to due process of law. State ex rel. Bayer Corp. v. Moriarty , 536 S.W.3d 227, 231 (Mo. banc 2017). Limitations on courts’ personal jurisdiction are enforced "principally [to] protect the liberty of the nonresident defendant." PPG , 560 S.W.3d at 891. For this reason, "the convenience of plaintiffs or third parties" does not factor into the analysis. Id. (quoting Walden v. Fiore , 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ).

Personal jurisdiction comes in two forms: general and specific. See Bristol-Myers Squibb Co. v. Super. Ct. of Cal., S.F. Cty. , ––– U.S. ––––, 137 S. Ct. 1773, 1779-80, 198 L.Ed.2d 395 (2018). "A court with general jurisdiction may hear any claim against [the] defendant, even if all the incidents underlying the claim occurred in a different [s]tate." Id. at 1780. Courts typically exercise general personal jurisdiction over defendants who are residents of the state. See id. ; see also PPG , 560 S.W.3d at 891 n.3. By contrast, to assert jurisdiction over an out-of-state defendant without violating due process, a court typically must possess specific personal jurisdiction over the defendant. See Bristol-Myers , 137 S. Ct. at 1780. For a state court to exercise specific personal jurisdiction over an out-of-state defendant consistent with due process, " ‘the suit’ must ‘arise out of or relate to the defendant's contacts with the forum.’ " Id. (internal alteration omitted) (quoting Daimler AG v. Bauman , 571 U.S. 117, 127, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) ). A state court may violate due process by exercising personal jurisdiction over a defendant who has no connection or relation to the forum state. See J. McIntyre Mach., Ltd. v. Nicastro , 564 U.S. 873, 881, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011) ("[Defendants] who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts as a general matter.").

The parties agree Missouri courts lack general personal jurisdiction over LG Chem because LG Chem is a South Korean company with its principal place of business in South Korea. LG Chem, however, argues the circuit court also lacks specific personal jurisdiction in this matter. When the defendant challenges a court's jurisdiction, the plaintiff bears the burden of establishing the defendant's contacts with the forum state are sufficient to establish personal jurisdiction. PPG , 560 S.W.3d at 891. "A reviewing court evaluates personal jurisdiction by considering the allegations contained in the pleadings to determine whether, if taken as true, they establish facts adequate to invoke Missouri's long-arm statute¹ and support a finding of minimum contacts with Missouri sufficient to satisfy due process."² Bryant , 310 S.W.3d at 231. A state court's assertion of specific personal jurisdiction over an out-of-state defendant is consistent with due process if the defendant "has at least one contact with this state and the cause of action being pursued arises out of that contact." State ex rel. Cedar Crest Apartments, LLC v. Grate , 577 S.W.3d 490, 494 (Mo. banc 2019) (emphasis omitted); see also Daimler , 571 U.S. at 127, 134 S.Ct. 746.

Bishop argues sufficient minimum contacts exist between Missouri and LG Chem to justify the circuit court's assertion of specific personal jurisdiction over LG Chem in this matter because there is an affiliation between Missouri and the underlying controversy. Bishop asserts it is sufficient that a product manufactured by LG Chem made its way to Missouri through the actions of a third-party distributor and caused injury in Missouri. Bishop is correct that, based on the United States Supreme Court's most recent decision in Bristol-Myers , there must be an affiliation between the forum state and the underlying controversy in cases involving out-of-state defendants. But Bishop's application of this standard is overbroad.

In Bristol-Myers , the Supreme Court explained, for a state court to exercise specific personal jurisdiction over an out-of-state defendant, there must be "an affiliation between the forum and the underlying controversy, principally ... an occurrence that takes place in the forum State." 137 S. Ct. at 1781. Bishop contends Missouri courts exercising specific personal jurisdiction over LG Chem in this matter would not violate due process because...