MetalForming, Inc. v. Schechtl Maschinenbau Gmbh
Opinion
Stephen Knox's hand was badly injured at his work at Cape Cod Copper (CCC) in October 2016 when he operated a machine that was manufactured by defendant Schechtl Maschinenbau GmbH, a German company. The machine had been sold to CCC by defendant MetalForming, Inc., an American company located in Georgia and Schechtl's U.S. distributor.
The question on appeal is whether there is personal jurisdiction over Schechtl, named as a defendant by Knox and as a cross-claim defendant by MetalForming. The district court dismissed the claims against Schechtl, finding that Schechtl had not purposefully availed itself of the privilege of doing business in Massachusetts.
Knox
v.
MetalForming, Inc.
,
We reverse.
I.
A. Background
The district court did not permit jurisdictional discovery.
In October 2016, Stephen D. Knox, plaintiff here along with his wife, Jean, was injured while using a Schechtl MAX 310, 1 a motor-driven metal-bending machine. The injury occurred at CCC, Knox's place of employment, located in Lakeville, Massachusetts. When Knox inadvertently hit the foot pedal of CCC's MAX 310, the machine activated, crushing his left hand.
Schechtl, the manufacturer of the MAX 310, is headquartered in Edling, Germany and maintains no operations in the United States. The company's marketing materials say that Schechtl manufactures the "most popular architectural sheet metal folders in the world."
Schechtl sells its machines to United States customers through MetalForming, a separate and independently owned U.S. distribution company. Schechtl's distribution agreement ("the agreement") with MetalForming gives MetalForming the exclusive right to distribute Schechtl's products in the "Contract Territory," which *688 comprises Canada, the United States, and Mexico.
The agreement outlines the procedure for selling Schechtl's machinery. The purchasing end user ("the purchaser") places an order with MetalForming, which in turn acquires the machine from Schechtl. MetalForming then sends a purchase order, naming the purchaser, to Schechtl in Germany. Under the agreement, MetalForming must include "technical and other data" in the purchase order, because that information is "of importance for the ordered product, the supply contract, and its performance."
Schechtl then chooses whether to accept the purchase order. If it does accept, it issues a written order confirmation, which "govern[s] the product to be delivered, its technical qualities, the delivery price, the place of delivery, the time of delivery as well as all other relevant contractual provisions."
Schechtl then manufactures the machine to the purchaser's specifications. The agreement provides that Schechtl "reserves the right, in the exercise of its sole discretion, to discontinue the manufacture or distribution of any Product without incurring any obligation to [MetalForming]."
When the machine is ready, Schechtl delivers it to a "freight forwarder or other transport agency" in Germany, at which point ownership passes to MetalForming. The record does not detail the ordinary shipment process after that point, but, as we describe below, it does show how the MAX 310 that injured Knox came to CCC.
Under the agreement, MetalForming is responsible for installation at the purchaser's site and for training the purchaser's personnel in the proper use of the machine. The agreement does, however, provide that it may "become necessary that installation work be conducted under the direction of a" Schechtl technician. And there is somewhat different information as to training contained in the information manual, as noted below.
The agreement also requires that MetalForming "provide any and all warranty services for the" Schechtl products. Schechtl provides a one-year warranty "to the end users for all of its machines, machine parts, tools, spare parts, and accessories."
MetalForming must also, under the agreement, "pass along to customers information received from [Schechtl]" regarding the products and their proper use. This information is packaged in with each machine when it is delivered to the purchaser. The enclosed material includes a declaration that the machine had been "developed, designed and manufactured in compliance with" applicable European safety directives. It also includes instruction manuals and safety instructions for each machine.
The instruction manual includes an "Instruction for Inquiries and Spare Part Orders," which directs purchasers to contact Schechtl (and not MetalForming) for inquiries and for additional machine parts. A later troubleshooting section of that manual also instructs that operators experiencing a problem should, "[i]f it is not possible to correct the malfunction with the aid of the following tables, contact the Schechtl Maschinenbau GmbH Service department." It does not instruct the operator/purchaser to contact MetalForming. The manual also offers that "[t]he operating company may receive extensive machine training by Schechtl Maschinenbau GmbH upon request ... at [Schechtl's] facilities or at the operating company's facilities." There is no evidence as to whether any Massachusetts purchaser made such a request.
*689 The materials provided to the purchasers of Schechtl machines contain Schechtl's direct contact information, including its phone and fax numbers and its mail and email addresses. Schechtl also operates a website that instructs purchasers of its machines to contact Schechtl directly for frequently asked questions, sales, parts, and other information relating to its machines. See Schechtl, http://www.schechtl.biz/index_e.htm (last visited Jan. 24, 2019).
Schechtl has provided MetalForming with advertising materials to market Schechtl products in the United States. MetalForming has promoted Schechtl machines in national trade publications and at industry trade shows. There is no record evidence as to the Massachusetts recipients of those trade publications. And while the record shows that Schechtl representatives attended several trade shows in the United States with MetalForming, there is no evidence that any of those shows were in Massachusetts.
Between 2000 and September 2017, MetalForming sold 2,639 Schechtl sheet metal machines throughout the United States, at a value of just over $97 million. Between July 2001 and September 2017, MetalForming sold to purchasers in Massachusetts forty-five Schechtl machines and 234 Schechtl parts, at a value of nearly $1.5 million (about $1.3 million for the machines and $176,752 for the parts). Schechtl's Massachusetts machine sales appear to constitute 1.35% of its United States machine sales. The record does not reveal Schechtl's total parts sales in the U.S.
Schechtl sold the MAX 310 which injured Knox to MetalForming in April 2001. MetalForming took delivery in Georgia. In August, four months after the initial sale, MetalForming shipped the machine to CCC, with CCC taking ownership of the machine in Georgia. The respective purchase orders show that MetalForming purchased the machine from Schechtl for $25,830 and sold it to CCC for $38,950. The purchase order from MetalForming to Schechtl identified the purchaser as CCC but did not give CCC's location. The purchase order from MetalForming to CCC shows that the machine came with a one-year Schechtl warranty and that the price included a "Schechtl Installation Charge" and a "Schechtl Freight Charge" to the purchaser, but no party explains what these last two terms mean or who receives the payment.
B. Procedural History
The Knoxes sued both Schechtl and MetalForming in Massachusetts state court. They alleged negligence, breach of warranty, loss of consortium, and violation of the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A. MetalForming removed the case to Massachusetts federal district court and filed crossclaims against Schechtl for indemnification, contribution, and breach of contract. Schechtl moved to dismiss the claims against it for lack of personal jurisdiction. Both the Knoxes and MetalForming opposed Schechtl's motion.
The district court, after finding that the terms of Massachusetts's long-arm statute were "easily ... satisfied,"
Knox
,
This appeal followed.
II.
The district court held that MetalForming had not made a prima facie showing of personal jurisdiction.
See
id.
at 184. On prima facie review, the plaintiffs' burden is to proffer evidence "sufficient to support findings of all facts essential to personal jurisdiction" without relying on unsupported allegations.
A Corp.
v.
All Am. Plumbing, Inc.
,
In a diversity jurisdiction case like this one, "a plaintiff must satisfy both the forum state's long-arm statute and the Due Process Clause of the Fourteenth Amendment."
C.W. Downer & Co.
v.
Bioriginal Food & Sci. Corp.
,
For the exercise of personal jurisdiction to be constitutional, a defendant must have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' "
Int'l Shoe Co.
v.
Washington
,
The Knoxes and MetalForming have asserted specific personal jurisdiction over Schechtl, so the constitutional analysis here has three components: relatedness, purposeful availment, and reasonableness.
Plixer Int'l, Inc.
v.
Scrutinizer GmbH
,
The district court reached only the issue of purposeful availment. But at oral argument Schechtl's counsel conceded that the other two requirements are met. We briefly explain below why we agree and address the main issue of purposeful availment.
A. Relatedness
To show relatedness, the Knoxes and MetalForming must demonstrate that their "cause of action either arises directly out of, or is related to, the defendant's
*691
forum-based contacts."
Harlow
v.
Children's Hosp.
,
B. Purposeful Availment
The case turns on the purposeful availment prong. To meet this requirement, the Knoxes and MetalForming bear the burden of demonstrating that Schechtl has "purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."
Hanson
v. Denckla,
The purposeful availment requirement ensures that the exercise of jurisdiction is essentially voluntary and foreseeable,
C.W. Downer
,
Each side asserts that the Supreme Court's decision in
J. McIntyre Machinery, Limited
v.
Nicastro
supports its view. Like other circuits, we have held that the narrowest, and thus binding, opinion from the "fragmented Court" in that case was Justice Breyer's.
Plixer
,
The district court found that Schechtl had not designated Massachusetts "for special attention" and had not "target[ed] buyers within" Massachusetts.
Knox
,
In
Plixer
we concluded that "Supreme Court precedent does not establish specific targeting of a forum
as the only means
of showing that the purposeful availment test has been met."
Specific jurisdiction must rest on a defendant's voluntary contact with the forum and not on "the 'unilateral activity of another party or a third person.' "
Burger King
,
These voluntary acts on Schechtl's part led to a "regular flow or regular course of sales," and more than that, in the Commonwealth. Over sixteen years, Schechtl, through MetalForming, sold forty-five machines (an average of close to three machines in each of those sixteen years). It also provided 234 parts to purchasers in Massachusetts. Those parts and machines led to nearly $1.5 million of Massachusetts sales for Schechtl.
We compare this case to
Plixer
, in which we upheld the exercise of jurisdiction over a defendant who, over three-and-a-half years, served 156 forum customers, generating about $200,000 in business.
See
Schechtl argues that we should discount its Massachusetts sales because those sales were part of a nationwide sales effort. But the question is not whether a defendant sells its product across the U.S.; it is instead whether a defendant's forum connection is such "that the exercise of jurisdiction is essentially voluntary and foreseeable."
Plixer
,
To be clear, we do not hold that the mere volume of Schechtl's sales in Massachusetts over sixteen years standing alone would suffice (a hypothetical situation we need not address). There is more here.
*693
Schechtl individually approved and manufactured according to purchaser-provided specifications each of the nearly fifty machines it sent to Massachusetts purchasers.
See
In re Chinese-Manufactured Drywall Prods. Liab. Litig.
,
Schechtl's relationship with purchasers in Massachusetts did not end when Schechtl accepted the purchase order and manufactured the machine. Schechtl required that MetalForming include, with each machine, materials that instructed that purchaser to contact Schechtl directly, whether to purchase replacement parts or to obtain assistance with troubleshooting and fixing problems. From the fact that hundreds of Schechtl parts were delivered to Massachusetts, the inference is entirely plausible that Massachusetts purchasers did use the channels Schechtl established both as to spare parts and as to troubleshooting.
Schechtl's channels to Massachusetts purchasers constitute efforts to continue -- and perhaps to expand -- its relationship with Massachusetts purchasers. Those deliberately opened channels, kept open over many years and presumably used, are relevant to the jurisdictional analysis.
See
Asahi
,
Purposeful availment analysis " 'will vary with the quality and the nature of the defendant's activity.' "
PREP Tours
,
Schechtl's only remaining argument is that MetalForming takes title to the Schechtl products in Germany. First Circuit law has long found this argument irrelevant to the jurisdictional analysis.
See
Benitez-Allende
v.
Alcan Aluminio do Brasil, S.A.
,
C. Reasonableness
We explain briefly why we consider the exercise of jurisdiction to be reasonable under the five "gestalt" factors:
(1) the defendant's burden of appearing [in the forum], (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
Ticketmaster-N.Y., Inc.
v.
Alioto
,
III.
We conclude that the exercise of personal jurisdiction over Schechtl comports with due process. We reverse and remand for further proceedings consistent with this opinion.
Although some materials refer to the machine as a "MAX3100 FOLDER," the parties refer to it as a "MAX 310," and we will do the same.
To be clear, there is no argument that a producer like Schechtl is subject to jurisdiction solely because it knows that its products might be sold in Massachusetts.
See
Nicastro
,
Schechtl argues that it did not know that CCC was located in Massachusetts. Even if that contention were correct, we would not consider it dispositive given all the other facts here. We do not comment on MetalForming's argument that Schechtl should have known CCC's location.
We also do not rest on, or even reach, the argument that Schechtl made no effort to exclude Massachusetts purchasers from its American market.
Cf.
Ainsworth
,
Reference
- Full Case Name
- Stephen D. KNOX; Jean Knox, Plaintiffs, Appellants, v. METALFORMING, INC., Defendant, Appellant, Schechtl Maschinenbau GmbH, Defendant, Appellee.
- Cited By
- 58 cases
- Status
- Published