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Estes v. JI-EE Industry Co., Ltd.

United States District Court, E.D. Kentucky, Central Division, Lexington

January 24, 2019

CONNIE ESTES and HAROLD ESTES, as next friends and custodians of Kenton Estes, an infant PLAINTIFFS



         This matter is before the Court on the renewed motion to dismiss for lack of personal jurisdiction (DE 17) by defendant JI-EE Industry Co., Ltd.; the plaintiffs' motion to transfer this action to a federal court in South Carolina and for oral argument (DE 19); and the plaintiffs' motion for additional discovery (DE 23).

         I. Motion to Dismiss (DE 17)

         With its renewed motion to dismiss, JI-EE objects to this Court's personal jurisdiction over it. This motion comes after the Court granted plaintiffs Connie and Harold Estes the opportunity to conducted discovery on the issue of personal jurisdiction. Because the plaintiffs have failed to produce evidence that JI-EE derives substantial revenue from the sale of goods or services in Kentucky or that it purposefully availed itself of the privilege of acting in Kentucky or causing a consequence here, the Court must grant the motion.

         The plaintiffs, who are Kentucky citizens, bring this action as the custodians of their grandson. They allege that their grandson, who was two-years old at the time of this incident, was injured while riding in an E-Ton ATV with their 12-year old granddaughter. There is no dispute that the ATV at issue was a 2000 model and was designed and manufactured by a company called E-Ton Dynamic Technology Co., Ltd. (“E-Ton Dynamic”). E-Ton Dynamic merged into JE-II in 2002. In 2008, plaintiff Harold Estes bought the ATV used from another individual. That individual told Estes he bought the ATV from an unidentified dealer in Somerset, Kentucky.

         The plaintiffs assert that, due to the negligent design of the ATV, their grandson's right toes were amputated by the ATV's chain/chain guard.

         JI-EE was organized in China and has its principal place of business in Taiwan. It argues that this Court cannot exercise personal jurisdiction over it and moves to dismiss the action under Federal Rule of Civil Procedure 12(b)(2). “The procedural scheme which guides the district court in disposing of Rule 12(b)(2) motions is well-settled.” Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). The plaintiff has the burden of establishing personal jurisdiction. Id. In responding to a “properly supported” motion challenging personal jurisdiction, the plaintiff cannot “stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.” Id.

         When determining whether personal jurisdiction exists over a defendant in a diversity case, “a federal court must apply the law of the state in which it sits, subject to constitutional limitations.” Reynolds v. Int'l Amateur Athletic Fed'n, 23 F.3d 1110, 1115 (6th Cir.1994). “[T]he defendant must be amenable to suit under the forum state's long-arm statute and the due process requirements of the Constitution must be met.” CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996) (citation omitted).

         The Kentucky Supreme Court has determined that the state's long-arm statute does not allow for personal jurisdiction to the full extent of the due-process clause. Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 57 (Ky. 2011). In other words, there may be situations where a defendant has sufficient contacts with the state to satisfy jurisdiction under the due-process clause, but the Kentucky statute still does not permit jurisdiction. Id. (citing Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 464 N.E.2d 432, 435 (1984)).

         Thus, in determining whether this Court may exercise personal jurisdiction over a defendant, the Court will first look to whether jurisdiction is permissible under Kentucky's long-arm statute. In response to JI-EE's renewed motion to dismiss, the plaintiffs make clear that they rely on the provision of the long-arm statute providing that a Kentucky court may exercise personal jurisdiction over a person with regards to a claim arising from that person - either directly or through an agent - “[c]ausing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he . . . derives substantial revenue from goods used or consumed. . . in this Commonwealth, provided that the tortious injury occurring in this Commonwealth arises out of . . . [the] derivation of substantial revenue within the Commonwealth.” KRS § 454.210(2)(a)(1)-(4); (DE 19, Response, at 8.)

         The plaintiffs acknowledge, however, that “they have no clue of the revenue JI-EE received from” sales in Kentucky. (DE 19, Response at 8.) They appear to argue that they should not be required to produce evidence on this issue because this information is “exclusively within the knowledge of JI-EE.” (DE 19, Response at 8.) The Court permitted the parties to conduct limited discovery on personal jurisdiction precisely so the plaintiffs could obtain evidence bearing on personal jurisdiction that was known or exclusively possessed by JI-EE. The Court explicitly directed the parties that such discovery could include, among other items, “the number of E-Ton ATVs sold to Kentucky dealers by JI-EE's distributors and the revenue JI-EE derived from such sales.” (DE 10, Order at 6-7.) Despite that opportunity, the plaintiffs concede they have no such evidence. Accordingly, the Court cannot find that JI-EE is amenable to suit under Kentucky's long-arm statute. For that reason alone, the Court cannot exercise jurisdiction over this action.

         Moreover, the Court cannot find that exercising personal jurisdiction over JI-EE in this action comports with due process. Two kinds of personal jurisdiction satisfy due process: general and specific. Conn v. Zakharov, 667 F.3d 705, 712-13 (6th Cir. 2012). “General jurisdiction is proper only where 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.” Gerber v. Riordan, 649 F.3d 514, 517 (6th Cir. August 18, 2011) (quoting Bird v. Parsons, 289 F.3d 865, 873 (6th Cir.2002)). “Specific jurisdiction, however, is proper only ‘in a suit arising out of or related to the defendant's contacts with the forum.'” Id. (quoting Bird, 289 F.3d at 874).

         The plaintiffs argue that the Court has specific jurisdiction over JI-EE. (DE 19, Response at 1.) This requires the plaintiffs to produce evidence that JI-EE “purposefully avail[ed]” itself “of the privilege of acting in [Kentucky] or causing a consequence in [Kentucky].” Southern Mach. Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968). On this issue, the plaintiffs state only that the Court has recognized that this requirement can be satisfied with evidence of a company “marketing the product through a distributor who has agreed to serve as the sales agent in the forum State.” (DE 19, Response at 10.) This is true. See Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102, 112 (1987) (plurality opinion). Nevertheless, even after discovery, the plaintiffs point to no evidence that JI-EE marketed their product through a distributor who agreed to serve as their sales agent in Kentucky.

         The evidence instead establishes that E-Ton Dynamic manufactured ATVs, including the ATV at issue in this case. The ATV at issue was a 2000 model. Later, in 2002, E-Ton Dynamic merged into JI-EE. There is no ...

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