dylan-book-and-karen-book-v-voma-tire-corporation-hunter-engineering ( 2015 )

IN THE SUPREME COURT OF IOWA
No. 13–1793
Filed March 6, 2015
DYLAN BOOK and KAREN BOOK,
Appellants,
vs.
VOMA TIRE CORPORATION, HUNTER ENGINEERING COMPANY, IOWA
TIRE, INC., HOLT SALES AND SERVICE, INC., SICE, S.p.A. and SICE
AUTOMOTIVE Equipment Societa Italiana Costruzioni Elettromeccaniche
S.I.C.E.-S.p.A,
Defendants,
and
DOUBLESTAR DONGFENG TYRE COMPANY, LTD.,
Appellee.
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VOMA TIRE CORPORATION, HUNTER ENGINEERING COMPANY
and IOWA TIRE, INC.,
Third-Party Plaintiffs,
vs.
JIM BOOK, Individually and JIM BOOK d/b/a ALLEY AUTO SALES,
Third-Party Defendant.
Appeal from the Iowa District Court for Dallas County, Bradley
McCall, Judge.
Plaintiffs in products-liability action, who seek recovery for
personal injuries from allegedly defective tire that exploded during
inflation at Iowa workplace, appeal ruling dismissing Chinese tire
manufacturer for lack of personal jurisdiction. REVERSED.
2
Neil Ray Chamberlin and James Bruce McMath of McMath Woods
P.A., Little Rock, Arkansas, and Robert A. Nading II of Nading Law Firm,
Ankeny, for appellants.
Kevin M. Reynolds of Whitfield & Eddy P.L.C., Des Moines, for
appellee.
3
WATERMAN, Justice.
In this appeal, we must confront unsettled federal precedent to
decide whether a Chinese tire manufacturer that sold thousands of tires
in Iowa through an American distributor may be compelled to defend a
lawsuit here consistent with the Due Process Clause of the United States
Constitution. The tire exploded as an Iowan was airing it up at his
father’s business in Adel, Iowa. The Iowan suffered severe and
permanent injuries and, through his mother, filed suit in his home
county seeking recovery from the tire manufacturer, alleging the tire’s
design was defective and unreasonably dangerous and prone to explode
during inflation. The manufacturer filed a motion to dismiss for lack of
personal jurisdiction, which the district court granted. We retained the
plaintiff’s appeal.
This case presents our first opportunity to address the “stream of
commerce” test for personal jurisdiction in a products-liability, personal-
injury case since the United States Supreme Court’s sharply divided
decision in J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. ____, ____,
131 S. Ct. 2780, 2785, 180 L. Ed. 2d 765, 772 (2011). For the reasons
explained below, we hold that the Federal Constitution permits the
exercise of personal jurisdiction over this high-volume, foreign
manufacturer whose allegedly dangerous product purchased in Iowa
injured a resident here. Accordingly, we reverse the district court’s
jurisdictional ruling and remand the case to proceed on the merits.
I. Background Facts and Proceedings.
Jim Book owns and operates an auto repair shop, Alley Auto Sales
in Adel, Iowa. In October 2009, Jim’s seventeen-year-old son, Dylan
Book, worked part-time for him through an apprenticeship affiliated with
Dylan’s high school. Jim agreed to sell and mount a new set of tires on a
4
customer’s horse trailer. Jim bought from an Iowa retailer four
LT 285/R16 10-ply Treadstone tires manufactured in China by
Doublestar Dongfeng Tyre Company, Ltd. (Doublestar). On the morning
of October 20, Jim began mounting the tires. When he tried to air one
up, he had trouble getting the tire to seat properly on the wheel rim. He
failed to realize he was attempting to mount a sixteen-inch tire on an
older model 16.5” rim, a common mistake. Distracted by a phone call,
Jim left the tire mounted on the wheel rim but underinflated. Dylan and
a coworker, Cody Donnelly, stepped into the shop. Without talking to his
father, Dylan began to air up the tire with Donnelly next to him. 1 The
tire exploded, severely injuring Dylan. The explosion blinded Dylan in
one eye and deprived him of part of his jaw, much of his sense of taste
and smell, and left him with partial use of his left arm and hand. His
injuries and rehabilitation have involved treatment by a dozen different
medical specialists in this state.
Dylan’s mother, Karen Book, filed a products-liability action in the
Iowa District Court for Dallas County, their home county, seeking money
damages for Dylan’s personal injuries and medical expenses and her loss
of consortium. The petition, filed October 8, 2010, initially named as
defendants Hunter Engineering Company (the company that designed
and sold the machine used to mount and inflate the tire); Iowa Tire, Inc.
(the Iowa retailer that sold the accident tire to Alley Auto Sales); Holt
Sales and Service, Inc. (the Iowa-based wholesaler that sold the accident
tire to Iowa Tire); and Voma Tire Corporation (Voma), a national tire
1Steven Greenslade, a friend of Jim’s and a first responder present when Dylan
was taken away by ambulance, later testified Donnelly told him Dylan inflated the tire
to eighty pounds of pressure per square inch (psi) while attempting to seat it, double
the forty psi recommended. The petition alleges defendants failed to warn of the
dangers of overinflation during mounting.
5
distributor that sold the accident tire to Holt. On April 20, 2012,
plaintiffs amended their petition to name as additional defendants
Doublestar and Societa Italiana Costruzioni Elettromeccaniche S.I.C.E.
S.p.A. (SICE) (an Italian corporation that manufactured the mounting
machine). Plaintiffs allege that the Treadstone tire used an unreasonably
dangerous multistrand weftless bead prone to fail if the sixteen-inch tire
is inflated on a 16.5” rim, a foreseeable occurrence. 2
SICE and Doublestar filed motions to dismiss for lack of personal
jurisdiction. In July 2012, the district court granted SICE’s motion and
deferred ruling on Doublestar’s motion to allow jurisdictional discovery to
“resolve the question of how the tire arrived in Iowa and . . . the number
of times that tires have been shipped directly into Iowa and the volume of
tires so shipped.” The defendants answered interrogatories and requests
for production and plaintiffs’ counsel deposed corporate representatives
of Doublestar and Voma. The evidentiary record establishes the
following facts.
Doublestar is a Chinese corporation with its principal place of
business in China. Doublestar manufactures tires in Shiyan City,
located in Hubei Provence in central China. Doublestar, one of the ten
largest tire manufacturers in China, produced nearly 3.2 million tires in
the nine months preceding Dylan’s accident. 3 Hundreds of thousands of
2The plaintiffs’ petition alleged the mounting machine lacked an available safety
feature to protect the person mounting the tire by holding the tire in place during an
explosion. It also alleged that the machine’s defective design enhanced the danger by
providing a “launching pad” for the tire and wheel assembly to “project off” and injure or
kill the mounter standing next to it.
3Doublestar’s corporate designee testified that it manufactured 3,198,169 tires
during the first nine months of 2009. Doublestar’s appellate brief states, “About 50
percent of these tires were sold in China, 20–30 percent were sold in the United States,
and the remainder of the tires were sold to other countries across the globe.”
6
those Doublestar tires were sold in the United States in 2009 through
two American distributors: Greenball Tire Corporation, based in
California, and Voma. Doublestar has no employees or offices in the
United States and does not advertise in this country.
Voma is a Tennessee corporation with its principal place of
business in Memphis. Voma owns the “Treadstone” trademark and has
been selling Treadstone tires since 2008. Doublestar is one of Voma’s
several tire suppliers. About twenty-five to thirty percent of Voma’s sales
in 2008 and 2009 were tires manufactured by Doublestar. Voma
provided Doublestar with a mold to stamp “Treadstone” on the sidewall
of these tires during the manufacturing process, and Voma exclusively
sold the Treadstone tires in the United States. Voma’s revenue from tire
sales dropped from ten million dollars in 2010 to zero when it ceased
selling tires by late 2012. Voma remained in business servicing warranty
claims.
When Voma ordered tires from Doublestar in 2009, it provided
detailed shipping requirements to the Chinese manufacturer. Doublestar
delivered the tires F.O.B. 4 to a port in Wuhan, China. There, the
shipping company placed the tires in containers to be loaded on
freighters destined for the United States. Doublestar completed each
order by providing instructions to the shipper as directed by Voma. To
save on shipping costs, Voma frequently instructed Doublestar to have
the tires shipped from China directly to distribution centers in states
including Iowa, Oklahoma, and Texas.
4F.O.B. is a contract delivery term meaning “free on board,” under which a
seller’s duties are discharged when the goods are put into the possession of the carrier,
at which point the risk of loss passes to the buyer. See Iowa Code § 554.2319(1)(a)
(2009).
7
Voma, not Doublestar, selected the destination of shipments from
China and paid the shipping costs. Doublestar received the shipping
instructions from Voma and directed the shipping company accordingly.
Doublestar knew the destinations identified on the shipping documents
containing Voma’s requirements. Voma routinely sent Doublestar the
bill of lading after each shipment was complete, which identified each
destination. Doublestar in turn maintained a spreadsheet showing the
destination for every tire it sold to Voma.
As of October 20, 2009, Voma had purchased 180,000 tires from
Doublestar. Voma sold 16,700 of those Doublestar tires to Holt in Iowa.
On sixteen occasions in 2008 and once in 2009, Voma instructed
Doublestar to ship the tires directly from China to Holt in Des Moines,
bypassing Voma’s Tennessee facility. Those seventeen direct shipments
from China to Iowa conveyed a total of 12,681 tires. None of those
seventeen China-to-Iowa shipments included any 10-ply tires of the
same model as the accident tire, but some of the containers included a
similar 14-ply Treadstone tire. The Doublestar witness testified its
employees knew some containers of tires were shipped directly to
“Des Moines, IA” but denied those persons knew “IA” meant the State of
Iowa.
Doublestar sold Voma 7008 of the 10-ply Treadstone tire model,
the type involved in Dylan’s accident, 999 of which Voma sold to Holt in
Iowa. In the month leading up to Dylan’s accident, Voma was selling
approximately 150 of the 10-ply tires to Holt every two weeks. Voma
shipped all of these 10-ply tires from its warehouse in Tennessee. The
DOT number stamped on the accident tire indicates Doublestar
manufactured it in China in early June of 2009. In 2009, Holt
8
purchased seven shipments of the 10-ply tires, all from Voma’s
warehouse in Tennessee.
In May 2013, after completion of jurisdictional discovery, the
district court granted Doublestar’s motion to dismiss. The district court
made a factual finding that the accident tire was shipped from China to
Voma’s warehouse in Memphis and found no 10-ply tires were shipped
directly to Iowa from China. The district court found the tires directly
shipped from China to Des Moines were a different model. Plaintiffs
dismissed their claims against the remaining parties on October 13,
2013, pursuant to a confidential settlement and appealed Doublestar’s
dismissal. We retained the appeal. At oral argument, counsel for
Doublestar conceded that Doublestar would be subject to personal
jurisdiction in Tennessee, Voma’s home state. 5
II. Standard of Review.
“ ‘We review a district court’s decision on a motion to dismiss for
lack of personal jurisdiction for correction of errors at law.’ ” Sioux
Pharm, Inc. v. Summit Nutritional Int’l, Inc., ___ N.W.2d ___, ___ (Iowa
2015) (quoting Shams v. Hassan, 829 N.W.2d 848, 853 (Iowa 2013)).
“We are not bound by the court’s conclusions of law or application of
legal principles. The district court’s factual findings are binding on
appeal if supported by substantial evidence.” Id. (citation omitted).
“[W]e accept as true the allegations of the petition and the contents
of uncontroverted affidavits.” Shams, 829 N.W.2d at 853 (internal
quotation marks omitted). “After the plaintiff makes a prima facie case
5In district court during oral argument on its motion to dismiss this Iowa action,
counsel for Doublestar stated, “Perhaps personal jurisdiction [over Doublestar] would
exist in the State of Tennessee where Voma is located.” Doublestar has never
contended in this action that it can only be sued in China.
9
showing that personal jurisdiction is appropriate, the burden shifts to
the defendant to rebut that showing.” Id.
III. Analysis.
We must decide whether the Due Process Clause of the United
States Constitution permits the exercise of personal jurisdiction over
Doublestar in Iowa. This issue requires us to revisit the stream-of-
commerce test of personal jurisdiction in light of J. McIntyre Machinery
and its progeny. We conclude that the stream-of-commerce test as
adopted in World-Wide Volkswagen Corp. and followed by our precedent
remains good law. See World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297–98, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490, 501–02 (1980);
Svendsen v. Questor Corp., 304 N.W.2d 428, 430–31 (Iowa 1981). We
hold Doublestar, a large, high volume manufacturer selling to a national
market, is subject to personal jurisdiction in Iowa based on its direct
shipments to Iowa of thousands of tires and indirect shipments of
thousands more to this state through its American distributor, including
the allegedly hazardous “accident tire” that injured the Iowa plaintiff at
his workplace in Iowa.
We begin by discussing the constitutional boundaries of personal
jurisdiction. Next, we trace the development of the stream-of-commerce
test and its competing formulations set forth in several divided opinions
of the U.S. Supreme Court and applied inconsistently in the lower courts.
Our survey of contemporary precedent nationwide persuades us the
Svendsen test we have used in Iowa products-liability cases should be
applied in this case, and we decline to adopt a more restrictive test as to
a high-volume manufacturer of a potentially hazardous product. Finally,
we apply the test and determine that Doublestar is subject to jurisdiction
in Iowa in this products-liability action.
10
A. Overview of Constitutional Limitations on Personal
Jurisdiction. Iowa’s jurisdictional rule “authorizes the widest
jurisdictional parameters allowed by the Due Process Clause.” Capital
Promotions, L.L.C. v. Don King Prods., Inc., 756 N.W.2d 828, 833 (Iowa
2008); see also Iowa R. Civ. P. 1.306 (“Every corporation, individual,
personal representative, partnership or association that shall have the
necessary minimum contact with the state of Iowa shall be subject to the
jurisdiction of the courts of this state . . . .”). Therefore, we confine our
analysis to the federal constitutional requirements for personal
jurisdiction.
“The Due Process Clause of the Fourteenth Amendment sets the
outer boundaries of a state tribunal’s authority to proceed against a
defendant.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.
___, ___, 131 S. Ct. 2846, 2853, 180 L. Ed. 2d 796, 805 (2011). “The Due
Process Clause protects an individual’s right to be deprived of life, liberty,
or property only by the exercise of lawful power.” J. McIntyre Mach., 564
U.S. at ____, 131 S. Ct. at 2786, 180 L. Ed. 2d at 773 (plurality opinion).
“As a general rule, neither statute nor judicial decree may bind strangers
to the State.” Id. at ___, 131 S. Ct. at 2787, 180 L. Ed. 2d at 774. “A
court may subject a defendant to judgment only when the defendant has
sufficient contacts with the sovereign ‘such that the maintenance of the
suit does not offend “traditional notions of fair play and substantial
justice.” ’ ” Id. (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945)). We recently reaffirmed
that “ ‘[f]airness is the crux of the minimum-contacts analysis.’ ” Sioux
Pharm, ___ N.W.2d at ___ (quoting Shams, 829 N.W.2d at 854).
The concept of minimum contacts, in turn, can be seen to
perform two related, but distinguishable, functions. It
protects the defendant against the burdens of litigating in a
11
distant or inconvenient forum. And it acts to ensure that the
States through their courts, do not reach out beyond the
limits imposed on them by their status as coequal sovereigns
in a federal system.
World-Wide Volkswagen Corp., 444 U.S. at 291–92, 100 S. Ct. at 564, 62
L. Ed. 2d at 498. Personal jurisdiction is only appropriate when “the
defendant’s conduct and connection with the forum State are such that
he should reasonably anticipate being haled into court there.” Id. at 297,
100 S. Ct. at 567, 62 L. Ed. 2d at 501. “Random or attenuated contacts
with the forum state do not satisfy the minimum contacts test.” Ostrem
v. Prideco Secure Loan Fund, LP, 841 N.W.2d 882, 891 (Iowa 2014).
There are two forms of personal jurisdiction, general and specific.
Id. at 892. General jurisdiction “ ‘refers to the power of a state to
adjudicate any cause of action involving a particular defendant,
regardless of where the cause of action arose.’ ” Id. (quoting Sondergard
v. Miles, Inc., 985 F.2d 1389, 1392 (8th Cir. 1993)). General or “all-
purpose” jurisdiction exists only when the defendant is “essentially at
home in the forum State.” Goodyear, 564 U.S. at ___, 131 S. Ct. at 2851,
180 L. Ed. 2d at 803; see also Sioux Pharm, ___ N.W.2d at ___ (applying
Goodyear “at home” test). Neither party argues that general jurisdiction
applies in this case, and we agree that Doublestar is not subject to
general personal jurisdiction in Iowa.
“Specific jurisdiction refers to jurisdiction over causes of action
arising from or related to a defendant’s actions within the forum state
. . . .” Capital Promotions, 756 N.W.2d at 833 (internal quotation marks
omitted). “[S]pecific jurisdiction has become the centerpiece of modern
jurisdiction theory, while general jurisdiction plays a reduced role.” Mary
Twitchell, The Myth of General Jurisdiction, 101 Harv. L. Rev. 610, 628
(1988); accord Goodyear, 564 U.S. at ___, 131 S. Ct. at 2854, 180
12
L. Ed. 2d at 806–07. Classically, the defendant must commit “ ‘some act
by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits
and protections of its laws.’ ” Ostrem, 841 N.W.2d at 892 (quoting
Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d
1283, 1298 (1958)). In order to find the minimum contacts necessary for
specific jurisdiction, the plaintiff must show two requirements:
“Where a forum seeks to assert specific jurisdiction
over an out-of-state defendant who has not consented to suit
there, [due process] is satisfied if the defendant has
‘purposefully directed’ his activities at residents of the forum
and the litigation results from alleged injuries that ‘arise out
of or relate to’ those activities.”
Capital Promotions, 756 N.W.2d at 834 (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528,
540–41 (1985) (footnote omitted)). “ ‘If sufficient minimum contacts
exist, the court must then determine whether the assertion of personal
jurisdiction would comport with fair play and substantial justice.’ ”
Sioux Pharm, ___ N.W.2d at ___ (quoting Shams, 829 N.W.2d at 857).
B. The Stream-of-Commerce Doctrine. The U.S. Supreme Court
first used the stream-of-commerce test in World-Wide Volkswagen Corp:
[I]f the sale of a product of a manufacturer or distributor
such as Audi or Volkswagen is not simply an isolated
occurrence, but arises from the efforts of the manufacturer
or distributor to serve directly or indirectly, the market for its
product in other States, it is not unreasonable to subject it
to suit in one of those States if its allegedly defective
merchandise has there been the source of injury to its owner
or to others. The forum State does not exceed its powers
under the Due Process Clause if it asserts personal
jurisdiction over a corporation that delivers its products into
the stream of commerce with the expectation that they will
be purchased by consumers in the forum State.
13
444 U.S. at 297–98, 100 S. Ct. at 567, 62 L. Ed. 2d at 501–02.
Subsequent decisions, however, have “created significant confusion in
lower courts over the constitutional standard for minimum contacts.”
State ex rel. Edmondson v. Native Wholesale Supply, 237 P.3d 199, 207
(Okla. 2010).
The Supreme Court’s most recent decision on the stream-of-
commerce test, J. McIntyre Machinery, failed to yield a majority opinion,
and courts remain divided on what test to use in products-liability cases.
See AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1362–63 (Fed.
Cir. 2012) (per curiam) (noting J. McIntyre Machinery “declined to resolve
[the Supreme Court’s] long-standing split on that theory” and left open
questions unanswered in prior decisions); Russell v. SNFA, 987 N.E.2d
778, 790 (Ill. 2013) (noting the “lower federal and state courts struggled
to reconcile [the Supreme Court’s] competing standards for the stream-
of-commerce theory” after Asahi Metal Industry Co. v. Superior Court, 480
U.S. 102, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987), and describing its
precedent as “ ‘extremely balkanized’ ” (quoting Wiles v. Morita Iron Works
Co., 530 N.E.2d 1382, 1388 (Ill. 1988))). The Books argue this case is
controlled by our long-standing Iowa precedent, Svendsen, applying the
World-Wide Volkswagen test. Doublestar urges us to apply the more
stringent “stream-of-commerce plus” test in the plurality opinion of J.
McIntyre Machinery. We conclude our long-standing Iowa test remains
good law and permits the exercise of personal jurisdiction over
Doublestar here. We decline to employ the more stringent test to a high-
volume manufacturer of an allegedly dangerous product. To explain
why, we take a closer look at the development of the stream-of-commerce
test.
14
In World-Wide Volkswagen, Harry and Kay Robinson, who lived in
New York, purchased a new Audi sedan from a tri-state dealer there.
World-Wide Volkswagen Corp., 444 U.S. at 288–89, 100 S. Ct. at 562–63,
62 L. Ed. 2d at 495–96. A year later, they set out to drive to Arizona. Id.
at 288, 100 S. Ct. at 562, 62 L. Ed. 2d at 495. As they drove through
Oklahoma, another car struck their Audi in the rear, causing a fire that
severely burned Kay and her two children. Id. The Robinsons filed a
products-liability action in state court in Oklahoma, against the Audi
manufacturer, the importer, the distributor, and the retail dealer,
alleging “their injuries resulted from defective design and placement of
the Audi’s gas tank and fuel system.” Id. at 288, 100 S. Ct. at 562, 62
L. Ed. 2d at 495–96. The foreign manufacturer, Audi NSU Auto Union
Aktiengesellschaft, and the importer, Volkswagen of America, Inc., did
not contest personal jurisdiction in Oklahoma. Id. at 288 n.3, 100 S. Ct.
at 562 n.3, 62 L. Ed. 2d at 496 n.3. The distributor, World-Wide
Volkswagen Corp., and retailer, Seaway Volkswagen, Inc., however,
moved to dismiss for lack of personal jurisdiction. Id. at 288, 100 S. Ct.
at 562–63, 62 L. Ed. 2d at 496. World-Wide and Seaway distributed and
sold Audis in only three states: New York, New Jersey, and Connecticut.
Id. at 288, 100 S. Ct. at 563, 62 L. Ed. 2d at 496. The Oklahoma trial
court ruled the defendants were subject to personal jurisdiction, and the
Oklahoma Supreme Court affirmed, reasoning that because a car is
mobile, it was foreseeable someone would drive it to Oklahoma. Id. at
290, 100 S. Ct. at 563–64, 62 L. Ed. 2d at 497. The United States
Supreme Court reversed, concluding that the mere foreseeability a party
would drive their car into Oklahoma was insufficient to establish
personal jurisdiction over the New York dealer and distributor. Id. at
295–96, 100 S. Ct. at 566, 62 L. Ed. 2d at 500. The Court held a state
15
can exercise jurisdiction only if the “defendant’s conduct and connection
with the forum State are such that he should reasonably anticipate being
haled into court there.” Id. at 297, 100 S. Ct. at 567, 62 L. Ed. 2d at
501. A corporate defendant is on notice it is subject to suit when it
“ ‘purposefully avails itself of the privilege of conducting activities within
the forum State.’ ” Id. (quoting Hanson, 357 U.S. at 253, 78 S. Ct. at
1240, 2 L. Ed. 2d at 1298)). The Court set forth the stream-of-commerce
test quoted above and applied it to determine the New York dealer and
distributor lacked the requisite contacts with Oklahoma. Id. at 299, 100
S. Ct. at 568, 62 L. Ed. 2d at 502.
We applied the World-Wide Volkswagen stream-of-commerce test a
year later in Svendsen, 304 N.W.2d at 430–31. In that case, we
concluded a Missouri manufacturer of billiards tables was subject to
personal jurisdiction in Iowa when it sold a defective table to an Omaha
distributor, who resold the table in Iowa where the plaintiff using it was
injured. Id. at 429 n.1, 431. As we said:
It is generally accepted that when a manufacturer voluntarily
places his product in the stream of commerce, the
constitutional requirement of minimum contacts will be
satisfied in all states where the manufacturer can foresee
that the product will be marketed.
Id. at 431. We concluded the close geographic proximity to Iowa of both
the manufacturer and distributor combined with the marketing efforts of
the parties made it foreseeable that the defendant’s product would be
used in Iowa. Id.
We later clarified Svendsen to note the mere foreseeability the
product would enter the forum is insufficient to establish personal
jurisdiction. See Smalley v. Dewberry, 379 N.W.2d 922, 924–25 (Iowa
1986). In Smalley, the plaintiff argued that because a trailer hitch is
16
mobile and could foreseeably be driven anywhere in the United States,
the defendants should be subject to jurisdiction wherever the trailer
traveled. Id. at 925. We concluded the foreseeability that matters is not
simply that the product will enter the forum state, but rather that “the
defendant’s conduct and connection with the forum State are such that
he should reasonably anticipate being haled into court there.” Id.
(quoting World-Wide Volkswagen Corp., 444 U.S. at 297, 100 S. Ct. at
567, 62 L. Ed. at 501). A few years later, we elaborated on the
foreseeability requirement:
We conclude that our Smalley holding in fact
reaffirmed the Svendsen holding, stating “the manufacturer
in Svendsen was indirectly, through others, seeking to
secure a market in Iowa.” 379 N.W.2d at 925. We find both
Svendsen and Smalley to be consistent with the reasoning in
World-Wide Volkswagen. In Smalley . . . , “foreseeability”
concerned the foreseeability to defendants that their
products would eventually cause harm in foreign states,
hundreds of miles from their market area.
State ex rel. Miller v. Baxter Chrysler Plymouth, Inc., 456 N.W.2d 371, 376
(Iowa 1990). We have not revisited the stream-of-commerce test since
those decisions.
Meanwhile, the U.S. Supreme Court decided Asahi. Asahi, like
this case, was a products-liability action for injuries caused by the failure
of a tire manufactured in a foreign country. 480 U.S. 105–06, 107 S. Ct.
at 1029, 94 L. Ed. 2d at 100. Gary Zurcher lost control of his Honda
motorcycle on Interstate 80 in California when his rear tire suddenly lost
air. Id. The collision severely injured Zurcher and killed his passenger
and wife, Ruth Ann Moreno. Id. at 105, 107 S. Ct. at 1029, 94 L. Ed. 2d
at 100. Zurcher brought a claim against Cheng Shin, the Taiwanese tire
manufacturer, which in turn brought a claim for indemnity against Asahi
Metal Industry Co., Ltd., the Japanese manufacturer of the tube valve
17
assembly. Id. at 106, 107 S. Ct. at 1029, 94 L. Ed. 2d at 100. Cheng
Shin and the other defendants settled with the victim, leaving only Cheng
Shin’s indemnity claim against Asahi. Id. Asahi had no direct contacts
with California. Id. at 106–07, 107 S. Ct. at 1029, 94 L. Ed. 2d at 100–
01. Cheng Shin purchased up to 500,000 valve assemblies from Asahi
annually, and sales to Cheng Shin accounted for only approximately one
percent of Asahi’s annual income. Id. at 106, 107 S. Ct. at 1029, 94
L. Ed. 2d at 101. Approximately twenty percent of Cheng Shin’s U.S.
sales were in California. Id. Taking a cue from World-Wide Volkswagen,
the Asahi concurrence distinguished between “ ‘goods which reach a
distant State through a chain of distribution and . . . goods which reach
the same State because a consumer . . . took them there.” Id. at 120,
107 S. Ct. at 1036, 94 L. Ed. 2d at 109 (Brennan, J., concurring in part
and concurring in judgment) (quoting World-Wide Volkswagen, 444 U.S.
at 306–07, 100 S. Ct. at 584, 62 L. Ed. 2d at 507 (Brennan, J.,
dissenting)).
The Asahi Court concluded that jurisdiction over Asahi did not
comport with fair play and substantial justice, but could not reach a
majority holding on minimum contacts. Id. at 105, 107 S. Ct. at 1028,
94 L. Ed. 2d at 100. Instead, Justice O’Connor, joined by Chief Justice
Rehnquist and Justices Powell and Scalia, proposed one test, while
Justice Brennan, joined by Justices White, Marshall, and Blackmun
proposed another. Compare id. at 108–13, 107 S. Ct. at 1030–32, 94
L. Ed. 2d at 102–05, with id. at 116–21, 107 S. Ct. at 1034–37, 94
L. Ed. 2d at 107–10 (Brennan, J., concurring in part and concurring in
judgment). Justice Stevens filed a third opinion concurring in part and
concurring in the judgment, also joined by Justices White and
18
Blackmun. Id. at 121–22, 107 S. Ct. at 1037, 94 L. Ed. 2d at 110–11
(Stevens, J., concurring in part and concurring in judgment).
Under Justice Brennan’s test:
The stream of commerce refers not to unpredictable currents
or eddies, but to the regular and anticipated flow of products
from manufacture to distribution to retail sale. As long as a
participant in this process is aware that the final product is
being marketed in the forum State, the possibility of a
lawsuit there cannot come as a surprise.
Id. at 117, 107 S. Ct. at 1034, 94 L. Ed. 2d at 107 (Brennan, J.,
concurring in part and concurring in judgment). By contrast, under
Justice O’Connor’s test:
The placement of a product into the stream of commerce,
without more, is not an act of the defendant purposefully
directed toward the forum State. Additional conduct of the
defendant may indicate an intent or purpose to serve the
market in the forum State, for example, designing the
product for the market in the forum State, advertising in the
forum State, establishing channels for providing regular
advice to customers in the forum State, or marketing the
product through a distributor who has agreed to serve as the
sales agent in the forum State. But a defendant's awareness
that the stream of commerce may or will sweep the product
into the forum State does not convert the mere act of placing
the product into the stream into an act purposefully directed
toward the forum State.
Id. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104 (plurality opinion).
Justice Stevens, writing separately, criticized the way Justice O’Connor
applied her “plus” test and offered a variation:
The plurality seems to assume that an unwavering line can
be drawn between “mere awareness” that a component will
find its way into the forum State and “purposeful availment”
of the forum’s market. Over the course of its dealings with
Cheng Shin, Asahi has arguably engaged in a higher
quantum of conduct than “[t]he placement of a product into
the stream of commerce, without more. . . .” Whether or not
this conduct rises to the level of purposeful availment
requires a constitutional determination that is affected by
the volume, the value, and the hazardous character of the
components.
19
Id. at 122, 107 S. Ct. at 1037, 94 L. Ed. 2d at 111 (Stevens, J.,
concurring in part and concurring in judgment) (emphasis added)
(citation omitted). The divided Asahi decision predictably led to a split in
authority in the lower courts:
With no guidance from the United States Supreme
Court since its split decision in Asahi, the federal circuit
courts and state courts have split on which “effects” test is
applicable. The First, Fourth, Sixth, Ninth, and Eleventh
Circuits employ the O’Connor “foreseeability plus” test. The
Fifth, Seventh, and Eighth Circuits employ the Brennan
“mere foreseeability” test. Other federal circuit courts have
declined to decide the issue and instead use both tests when
deciding whether a defendant has sufficient contacts with a
state to justify jurisdiction. State courts are also
significantly divided on the issue.
Angela M. Laughlin, This Ain’t the Texas Two Step Folks: Disharmony,
Confusion, and the Unfair Nature of Personal Jurisdiction Analysis in the
Fifth Circuit, 37 Cap. U. L. Rev. 681, 703–06 & nn.129–33 (collecting
cases).
Doublestar relies on Humble v. Toyota Motor Co., in which
Arakawa, a Japanese corporation, manufactured car seats and sold them
to Toyota Motor Company, Ltd. in Japan, which installed them in
vehicles to be sold in the United States. 727 F.2d 709, 710 (8th Cir.
1984) (per curiam). The district court dismissed the action for lack of
personal jurisdiction, finding that Toyota made all marketing and sales
decisions, and the Eighth Circuit affirmed in a per curiam opinion. Id. at
711. Humble is distinguishable because, unlike Arakawa, Doublestar
shipped its products directly to the forum state at the direction of its
American distributor. Moreover, the Court of Appeals for the Eighth
Circuit caselaw supports jurisdiction in other respects.
20
Even before World-Wide Volkswagen, the Eighth Circuit held
nonresident manufacturers could not avoid personal jurisdiction by
using distributors as intermediaries:
“Direct contact with the forum state is not essential to
the exercise of personal jurisdiction. Metz may not have
physically entered the state of Illinois, but it placed its flash
devices in the stream of commerce under such
circumstances that it should reasonably have anticipated
that injury through infringement would occur there. We look
to the economic and commercial realities of this case, and in
our view, it is not within the contemplation of the concepts of
fairness and due process to allow a wrongdoing
manufacturer to insulate himself from the long arm of the
courts by using an intermediary or by professing ignorance
of the ultimate destination of his products.”
Hutson v. Fehr Bros., Inc., 584 F.2d 833, 838–39 (8th Cir. 1978) (quoting
Honeywell v. Metz Apparatewerks, 509 F.2d 1137, 1144 (7th Cir. 1975)
(citations omitted)). More recently, the Eighth Circuit echoed its
conclusion that foreign manufacturers cannot avoid jurisdiction by using
intermediaries. See Clune v. Alimark AB, 233 F.3d 538, 542 (8th Cir.
2000) (noting Justice O’Connor’s test was not supported by five justices).
That case arose from a fatal workplace accident in Missouri using a hoist
made in Sweden. Id. at 540. The Clune court concluded that personal
jurisdiction existed over the Swedish manufacturer that had designed the
hoist for a U.S. market; had agreements with U.S. distributors; displayed
its label on its hoists; and through intermediaries, had sold between
twenty and forty of the machines in Missouri. Id. at 543–44. The Eighth
Circuit rejected the manufacturer’s argument that it did not know where
its products would end up once the ship left the Swedish port. Id. at 543
(“ ‘[S]uch ignorance defie[d] reason and could aptly be labeled as
“willful.” ’ ” (quoting Barone v. Rich Bros. Interstate Display Fireworks Co.,
25 F.3d 610, 613 (8th Cir. 1994))). Clune effectively applied Brennan’s
21
broader stream-of-commerce test. Likewise, in Barone, the Eighth
Circuit held Hosoya, a Japanese fireworks manufacturer, was subject to
personal jurisdiction in Nebraska because it sold fireworks to a
distributor that resold them in Nebraska. 25 F.3d at 611, 615. The
Barone court applied a broad version of the stream-of-commerce test and
focused on the fact that Nebraska was part of the Japanese company’s
distribution scheme, saying, “Hosoya has reaped the benefits of its
network of distributors, and it is only reasonable and just that it should
now be held accountable in the forum of the plaintiff’s choice . . . .” Id. at
615. The Eighth Circuit used the broader stream-of-commerce test again
in Vandelune v. 4B Elevator Components Unltd., saying no direct
marketing presence is necessary when a foreign manufacturer designed
and labeled grain elevators for the Iowa market and sold 619 units in a
year. 148 F.3d 943, 948 (8th Cir. 1998). As the court said,
when a foreign manufacturer “pour[s] its products” into a
regional distributor with the expectation that the distributor
will penetrate a discrete, multi-State trade area, the
manufacturer has “purposefully reaped the benefits” of the
laws of each State in that trade area for due process
purposes.
Id. (quoting Barone, 25 F.3d at 615).
We note that some courts rely on Justice Steven’s conclusion that
the jurisdictional analysis is “affected by the volume, the value, and the
hazardous character” of the goods. Asahi, 480 U.S. at 122, 107 S. Ct. at
1037, 94 L. Ed. 2d at 110–11 (Stevens, J., concurring in part and
concurring in judgment). One federal district court elaborated:
Thus, Justice Stevens frames a test which satisfies the
concerns of the entire Court. He requires that there be a
stream-of-commerce plus, as Part II–A in Asahi argues, but
requires only that the plus be a reasonable expectation of
being subject to jurisdiction in the forum State. Justice
Steven’s view is also in closer accord with World-Wide
22
Volkswagen’s “reasonableness” analysis than is Justice
O’Connor’s opinion which—opting for a list of rigid factors—
eschews the careful, case-by-case consideration of a
defendant’s contacts and reasonable expectations. The
reasonableness qualification on the stream-of-commerce test
is further buttressed by the members of the Court who
concurred with Justice Brennan in Asahi, where the axis of
the agreement with the O’Connor plurality was in Part II–B,
the “reasonableness” of assessing jurisdiction.
The reasonableness qualification to the stream-of-
commerce test, in contrast to Justice O’Connor’s more
objective but less realistic “plus” factors has the appeal of
common-sense and fundamental fairness.
Abuan v. Gen. Elec. Co., 735 F. Supp. 1479, 1486 (D. Guam. 1990)
(citations omitted). The Abuan court ruled that Monsanto, a bulk seller
of Polychlorinated Biphenyls (PCBs), was subject to personal jurisdiction
in Guam on personal injury claims arising from exposure to that
chemical when a hose on an electrical transformer ruptured to spill that
dangerous chemical there. Id. at 1480–81. The court found Monsanto
had sold PCBs “by the railcar tank-load” to General Electric in Alabama.
Id. at 1486. The court relied on the volume of the hazardous chemical
sold in determining that Monsanto was subject to jurisdiction in other
forums where GE installed the transformers containing PCBs. Id. at
1486–87. Other courts similarly have considered the hazardous nature
of the product in determining personal jurisdiction. See Morris v. SSE,
Inc., 843 F.2d 489, 494 (11th Cir. 1988) (“Finally, we believe that the
Sentinel Mark 2000 falls within Justice Stevens’ ‘hazardous product’
category. . . . Thus it is clear that SSE was aware it was sending a
hazardous product to Gulf Coast Air Sports . . . .”); Seirus Innovative
Accessories, Inc. v. Cabela’s, Inc., No. 09-CV-102 JLS (WMc), 2009 WL
9141752, at *3 (S.D. Cal. Nov. 2, 2009) (applying Stevens’s standard to
the volume of products sold in California); Osorio v. Dole Food Co., No.
07-22693-CIV, 2009 WL 48189, at *7, *11 (S.D. Fla. Jan. 5, 2009)
23
(discussing the hazardous-product rule and then applying it to the
chemicals at issue); Ex parte DBI, Inc., 23 So. 3d 635, 638 (Ala. 2009)
(noting the parties conducted discovery on the volume, value, and
hazardous character of the product to apply the Stevens test).
After Asahi, the Supreme Court did not revisit the stream-of-
commerce test for almost twenty-five years, and when it did, the Court
failed to speak in one voice. Instead, the Court was once again
fragmented, with Justice Kennedy authoring the plurality opinion joined
by Chief Justice Roberts, and Justices Scalia and Thomas, while Justice
Breyer filed a concurring opinion joined by Justice Alito. See J. McIntyre
Mach., 564 U.S. at ___, 131 S. Ct. at 2785, 180 L. Ed. 2d at 772
(plurality opinion); id. at ___, 131 S. Ct. at 2791, 180 L. Ed. 2d at 778
(Breyer, J., concurring in judgment). Justice Ginsburg filed a dissenting
opinion in which Justices Sotomayor and Kagen joined. Id. at ___, 131
S. Ct. at 2794, 180 L. Ed. 2d at 782 (Ginsburg, J., dissenting). In J.
McIntyre Machinery, the Court reviewed a products-liability decision by
the New Jersey Supreme Court. Id. at ___, 131 S. Ct. at 2786, 180
L. Ed. 2d at 772–73 (plurality opinion). The plaintiff seriously injured his
hand while using a metal shearing machine manufactured in England
and sold in New Jersey through a U.S. distributer. Id. No more than
four machines sold by the manufacturer ended up in New Jersey and
possibly only the one used by the plaintiff. Id. As the plurality put it,
“The question here is whether the New Jersey courts have jurisdiction
over J. McIntyre, notwithstanding the fact that the company at no time
either marketed goods in the State or shipped them there.” Id. at ___,
131 S. Ct. at 2786, 180 L. Ed. 2d at 772. The trial court dismissed the
action for lack of personal jurisdiction, finding that the defendant “ ‘does
not have a single contact with New Jersey short of the machine in
24
question ending up in this state.’ ” Nicastro v. McIntyre Mach. Am., Ltd.,
945 A.2d 92, 99 (N.J. Super. Ct. App. Div. 2008). The Superior Court of
New Jersey, Appellate Division, reversed, reasoning that a distribution
system designed to serve all fifty states constituted sufficient minimum
contacts. Id. at 108. The New Jersey Supreme Court held J. McIntyre
Machinery was subject to personal jurisdiction because “its products are
distributed through a nationwide distribution system that might lead to
those products being sold in any of the fifty states,” and its employees
came to trade shows in other states. Nicastro v. McIntyre Mach. Am.,
Ltd., 987 A.2d 575, 592 (N.J. 2010). The United States Supreme Court
reversed, stating, “This Court’s Asahi decision may be responsible in part
for [the New Jersey Supreme Court’s] error regarding the stream of
commerce, and this case presents an opportunity to provide greater
clarity.” J. McIntyre Mach., 564 U.S. at ___, 131 S. Ct. at 2786, 180
L. Ed. 2d at 773. The desired clarification, however, was not
forthcoming.
Justice Kennedy’s plurality opinion explicitly rejected Brennan’s
approach in Asahi and endorsed Justice O’Connor’s stricter version,
stating, “The principal inquiry in cases of this sort is whether the
defendant’s activities manifest an intention to submit to the power of a
sovereign.” Id. at ___, 131 S. Ct at 2788, 180 L. Ed. 2d at 775.
The defendant’s transmission of goods permits the exercise
of jurisdiction only where the defendant can be said to have
targeted the forum; as a general rule, it is not enough that
the defendant might have predicted that its goods will reach
the forum State.
Id. (emphasis added). The plurality concluded that although J. McIntyre
Machinery marketed its goods in the United States generally, it did not
25
target New Jersey and, therefore, was not subject to jurisdiction. Id. at
___, 131 S. Ct. at 2791, 180 L. Ed. 2d at 778.
Justice Breyer and Justice Alito concurred in the judgment but
rejected the plurality’s reasoning. Id. at ___, 131 S. Ct. at 2793, 180
L. Ed. 2d at 780 (Breyer, J., concurring in judgment) (calling the
plurality’s test a “seemingly strict no-jurisdiction rule” and questioning
the meaning of the “targeting” language as applied to modern online
commercial markets). Instead, Justice Breyer’s concurrence opined, “In
my view, the outcome of this case is determined by our precedents.” Id.
at ___, 131 S. Ct. at 2791, 180 L. Ed. 2d at 778. The concurrence
expressly limited the holding to the facts of the case and declined to
adopt any broader rules. Id. at ___, 131 S. Ct. at 2792, 180 L. Ed. 2d at
779 (“None of our precedents finds that a single isolated sale . . . is
sufficient.”). To bolster his conclusion that a single sale is insufficient,
Justice Breyer referred to Justice Stevens’s statement in Asahi that the
volume, value, and hazardous character of the product impacts the
jurisdictional analysis. Id.
The three-justice dissent, authored by Justice Ginsburg, harshly
criticized the plurality and the concurrence, stating:
Inconceivable as it may have seemed yesterday, the
splintered majority today “turn[s] the clock back to the days
before modern long-arm statutes when a manufacturer, to
avoid being haled into court where a user is injured, need
only Pilate-like wash its hands of a product by having
independent distributors market it.”
Id. at ___, 131 S. Ct. at 2795, 180 L. Ed. 2d at 782 (Ginsburg, J.,
dissenting) (quoting Russell J. Weintraub, A Map Out of the Personal
Jurisdiction Labyrinth, 28 U.C. Davis L. Rev. 531, 555 (1995) [hereinafter
Weintraub]). The dissent pointedly criticized the plurality for relying on
federalism principles rather than the Due Process Clause and argued
26
that J. McIntyre Machinery should be subject to jurisdiction in every
state because of its decision to target a national market. Id. at ___, 131
S. Ct. at 2798–99, 180 L. Ed. 2d at 786–87. Without choosing between
the competing stream-of-commerce tests from Asahi, the dissent argued
that sufficient minimum contacts existed to satisfy either standard. Id.
at ___, 131 S. Ct. at 2803, 180 L. Ed. 2d at 791. The dissent also
collected cases upholding personal jurisdiction over foreign
manufacturers targeting a nationwide market through U.S. distributors.
Id. at ___ & n.19, 131 S. Ct. at 2804–06 & n.19, 180 L. Ed. 2d at 792–95
& n.19. Finally, the dissent invoked concerns of reasonableness and
fairness by arguing manufacturers should be subject to personal
jurisdiction anywhere their products cause injury:
Is it not fair and reasonable, given the mode of trading of
which this case is an example, to require the international
seller to defend at the place its products cause injury? Do
not litigational convenience and choice-of-law considerations
point in that direction? On what measure of reason and
fairness can it be considered undue to require McIntyre UK
to defend in New Jersey as an incident of its efforts to
develop a market for its industrial machines anywhere and
everywhere in the United States? Is not the burden on
McIntyre UK to defend in New Jersey fair, i.e., a reasonable
cost of transacting business internationally, in comparison
to the burden on Nicastro to go to Nottingham, England to
gain recompense for an injury he sustained using McIntyre’s
product at his workplace in Saddle Brook, New Jersey?
Id. at ___, 131 S. Ct. at 2800–01, 180 L. Ed. 2d at 788–89 (footnotes
omitted). Justice Ginsburg concluded, “I take heart that the plurality
opinion does not speak for the Court[.]” Id. at ___, 131 S. Ct. at 2804,
180 L. Ed. 2d at 792.
“When there is no majority opinion, the narrower holding controls.”
Panetti v. Quarterman, 551 U.S. 930, 949, 127 S. Ct. 2842, 2856, 168
L. Ed. 2d 662, 679 (2007) (citing Marks v. United States, 430 U.S. 188,
27
193, 97 S. Ct. 990, 993, 51 L. Ed. 2d 260, 266 (1977)); State v. Iowa Dist.
Ct., 801 N.W.2d 513, 522 (Iowa 2011) (same). We agree with the federal
circuit courts of appeal that have concluded Justice Breyer’s concurrence
controls the holding of J. McIntyre Machinery. See Williams v. Romarm,
SA, 756 F.3d 777, 784 (D.C. Cir. 2014); In re Chinese-Manufactured
Drywall Prods. Liab. Litig., 753 F.3d 521, 541 (5th Cir. 2014); AFTG-TG,
689 F.3d at 1363. Justice Breyer’s concurrence expressly relies on
existing precedent and disclaims any new stream-of-commerce test. J.
McIntyre Mach., 564 U.S. at ___, 131 S. Ct. at 2794, 180 L. Ed. 2d at 782
(Breyer, J., concurring in judgment). Accordingly, the stream-of-
commerce test of World-Wide Volkswagen and Svendsen remains good
law and controlling precedent in Iowa after J. McIntyre Machinery.
Other state appellate courts likewise have interpreted J. McIntyre
Machinery to conclude their existing precedent on the stream-of-
commerce test remains good law. See Russell, 987 N.E.2d at 794
(“Accordingly, as in [Wiles], we will not adopt either the broad or narrow
version of the [stream-of-commerce] theory without more definitive
guidance from a majority of the United States Supreme Court.”);
Jacobsen v. Asbestos Corp. Ltd., 119 So. 3d 770, 782 (La. Ct. App. 2013)
(concluding that court is “free to continue . . . its use of the ‘stream-of-
commerce’ theory”); Butler v. JLA Indus. Equip., Inc., 845 N.W.2d 834,
846 (Minn. Ct. App. 2014) (distilling five guiding “principles” from J.
McIntyre Machinery and continuing to apply its stream-of-commerce
precedent in a five-factor test); Sproul v. Rob & Charlies, Inc., 304 P.3d
18, 33 (N.M. Ct. App. 2012) (“Because J. McIntyre Machinery did not
produce a majority opinion . . . pre-Asahi case law utilizing the approach
set forth in World-Wide Volkswagen remains binding in New Mexico.”).
28
The Books urge us to follow the Oregon Supreme Court’s decision
in Willemsen v. Invacare Corp., in which a Taiwanese manufacturer of
battery chargers, CTE, supplied chargers for motorized wheelchairs to an
Ohio corporation, which then sold over one thousand wheelchairs to
customers in Oregon. 282 P.3d 867, 869–70 (Or. 2012) (en banc).
Plaintiffs sued CTE in Oregon after their mother died in a fire ignited by
the defective battery, and CTE moved to dismiss for lack of personal
jurisdiction. Id. The trial court denied the motion, and the Oregon
Supreme Court denied CTE’s petition for a writ of mandamus. Id. The
United States Supreme Court granted CTE’s petition for certiorari and
remanded the case to the Oregon Supreme Court for reconsideration in
light of J. McIntyre Machinery. Id. The Oregon Supreme Court
determined that Justice Breyer’s concurrence was the holding of J.
McIntyre Machinery because it was the narrowest ground for the
decision. Id. at 873. Under that holding, a single sale in a forum state is
insufficient to establish personal jurisdiction over a manufacturer selling
through a national distributor. Id. at 874. In Willemsen, by contrast,
1102 wheelchairs with the battery chargers had been sold in Oregon over
a two-year period. Id. The Oregon Supreme court concluded that this
volume was sufficient to constitute a “ ‘regular course’ of sales.” Id. at
875 (quoting J. McIntyre Mach., 564 U.S. at ___, 131 S. Ct. at 2792, 180
L. Ed. 2d at 779). Therefore, the court concluded personal jurisdiction
could be exercised over CTE in Oregon under a stream-of-commerce test.
Id. at 877.
We believe the present case is a clearer case for personal
jurisdiction than Willemsen. There was a regular course of sales of
Doublestar’s tires (not merely products containing Doublestar
29
components) into Iowa, and Doublestar actually shipped thousand of
tires (albeit not the accident tire) into Iowa.
Doublestar’s challenge to jurisdiction relies in part on our decision
in Capital Promotions, a case that never mentions the stream-of-
commerce test. 756 N.W.2d 828. That case was not a products-liability
action and is factually inapposite. Capital Promotions involved
intentional tort claims arising from a dispute between two boxing
promoters over an Iowa-born prizefighter, Tye Fields. Id. at 830–31.
Capital Promotions, an Iowa limited liability company based in this state,
entered into a five-year exclusive promotional contract with Fields in
2000 when the boxer resided in Missouri. Id. at 831. Fields won a
heavyweight title in 2003, prompting repeated efforts by Don King
Productions to acquire the promotional rights for Fields, who had moved
to Nevada. Id. Capital Promotions sued Don King Productions, a
Delaware corporation based in Florida, for intentional interference with
the Iowa entity’s contract with Fields. Id. at 831–32. Don King had
never promoted a prizefight in Iowa and had no Iowa office or employees.
Id. at 831. The alleged interference took place during phone calls to
Iowans and meetings in other states. Id. at 831–32. The district court
dismissed the lawsuit for lack of personal jurisdiction, and the court of
appeals affirmed. Id. at 832. On further review, we affirmed, applying
the World-Wide Volkswagen test for personal jurisdiction along with the
Calder effects test for intentional tort cases. See id. at 833–38. We see
nothing in Capital Promotions that retreats from the stream-of-commerce
test for products-liability actions. 6
6The district court in this case relied on Woodhurst v. Manny’s Inc., an
unpublished Iowa Court of Appeals decision that quotes Justice Kennedy’s plurality
opinion in J. McIntyre Machinery for the proposition that “[j]urisdiction may be exercised
30
We reiterate that Svendsen and World-Wide Volkswagen remain
the controlling precedent for evaluating personal jurisdiction in products-
liability cases. Yet, this case presents the opportunity to revisit our
precedent to consider adopting Justice O’Connor’s more stringent
stream-of-commerce plus test, as urged by Doublestar.
C. The Opportunity to Adopt the More Stringent Stream-of-
Commerce Plus Test. No consensus has emerged among the lower
courts as to the competing tests for determining personal jurisdiction in
products-liability actions. We decline to overrule our precedents to
impose a more restrictive test that would limit access to justice in Iowa
‘only where the defendant can be said to have targeted the forum.’ ” No. 12–0317, 2013
WL 1452929, *2 (Iowa Ct. App. April 10, 2013) (quoting J. McIntyre Mach., 564 U.S. at
___, 131 S. Ct. at 2788, 180 L. Ed. 2d at 775 (plurality opinion)). In that case, an
intoxicated patron at a tavern in Sabula, Iowa, shot the plaintiff. Id. at *1. The plaintiff
brought a dram-shop liability claim against a restaurant, Manny’s, that served drinks to
the shooter a few miles away in Savannah, Illinois. Id. The Iowa district court granted
Manny’s motion to dismiss for lack of personal jurisdiction. Id. at *2. The court of
appeals affirmed, rejecting plaintiff’s argument that jurisdiction could be based on
advertisements and the close proximity to the Iowa border. Id. (noting the
advertisements did not specifically target Iowans). The Woodhurst court appropriately
distinguished Svendsen and J. McIntyre Machinery as follows:
[The Svendsen] opinion involved a distinct factual scenario: a
manufacturer’s placement of an allegedly defective good into the “stream
of commerce.” Svendsen, 304 N.W.2d at 430. The “stream of commerce”
concept permits “jurisdiction in products liability cases in which the
product has traveled through an extensive chain of distribution before
reaching the ultimate consumer.” Goodyear, [564 U.S. at ___,] 131 S. Ct.
at 2855[, 180 L. Ed. 2d at 807] (quotation marks and citation omitted);
accord J. McIntyre Mach. v. Nicastro, [564 U.S. ___, ___,] 131 S. Ct. 2780,
2788[, 180 L. Ed. 2d 765, 775] (2011) (“[S]tream of commerce . . . refers
to the movement of goods from manufacturers through distributors to
consumers[.]”). The concept is inapposite here.
Id. The Woodhurst court followed our decision in Meyers v. Kallestead, 476 N.W.2d 65
(Iowa 1991), to affirm the dismissal of Manny’s for lack of jurisdiction. See id. at *3; see
also Meyer, 476 N.W.2d at 68 (affirming dismissal of Illinois tavern for lack of personal
jurisdiction in Iowa). Neither case held that the Iowa or Illinois dram-shop statutes
apply extraterritorially to impose liability on the licensee for injuries inflicted in another
state. We agree with the Woodhurst court that dram-shop cases and products-liability
cases are inapposite.
31
courts for residents of our state injured by allegedly defective products
purchased here. Stare decisis alone dictates continued adherence to our
precedent absent a compelling reason to change the law. See Ackelson v.
Manley Toy Direct, L.L.C., 832 N.W.2d 678, 688 (Iowa 2013) (“We are slow
to depart from stare decisis and only do so under the most cogent
circumstances.”); State v. Derby, 800 N.W.2d 52, 59 (Iowa 2011) (“We
reiterate that we ‘do not overturn our precedents lightly and will not do
so absent a showing the prior decision was clearly erroneous.’ ” (quoting
McElroy v. State, 703 N.W.2d 385, 394–95 (Iowa 2005) (collecting cases
on stare decisis))); Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 762
N.W.2d 463, 474 (Iowa 2009) (noting “raging controversy in the law” on
implied-warranty issue in other jurisdictions with competing majority
and minority rules and declining to disturb Iowa precedent based on
stare decisis). Moreover, sound policy reasons cut against a more
stringent test for jurisdiction over high-volume manufacturers in
products-liability cases.
“ ‘Fairness is the crux of the minimum-contacts analysis.’ ” Sioux
Pharm., ___ N.W.2d at ___ (quoting Shams, 829 N.W.2d at 854). Is it
unfair to compel a manufacturer selling thousands of products
nationwide to defend its allegedly unsafe design in a state where its
product was sold and injured a resident using it? We think not. See
Asahi, 480 U.S. at 117, 107 S. Ct. at 1035, 94 L. Ed. 2d at 107
(Brennan, J., concurring in part and concurring in judgment) (“A
defendant who has placed goods in the stream of commerce benefits
economically from the retail sale of the final product in the forum
State[.]”). We adopted products liability to ensure that “ ‘the costs of
injuries resulting from defective products are borne by the
manufacturers that put such products on the market.’ ” Hawkeye-Sec.
32
Ins. Co. v. Ford Motor Co., 174 N.W.2d 672, 683 (Iowa 1970) (quoting
Greenman v. Yuba Power Prods., Inc., 377 P.2d 897, 900 (Cal. 1963)). We
would undermine that purpose if we closed the local courthouse door to
injured consumers.
Significantly, the product at issue here is a tire with an allegedly
dangerous design. We note Justice Stevens’s concurrence in Asahi that
the jurisdictional analysis “is affected by the volume, the value, and the
hazardous character of the components.” 480 U.S. at 122, 107 S. Ct. at
1037, 94 L. Ed. 2d at 111 (Stevens, J., concurring in part and concurring
in judgment) (emphasis added). Plaintiffs allege in this case that the
Doublestar tire design is prone to explode during reasonably foreseeable
mounting mistakes. Indeed, the accident underlying this lawsuit
resulted when Jim Book made the not uncommon mistake of attempting
to mount a sixteen-inch tire on a 16.5” rim, and his son Dylan, the
victim, overinflated the tire to attempt to get it seated.
We recognize the burden placed on alien defendants: “The unique
burdens placed upon one who must defend oneself in a foreign legal
system should have significant weight in assessing the reasonableness of
stretching the long arm of personal jurisdiction over national borders.”
Id. at 114, 107 S. Ct. at 1033, 94 L. Ed. 2d at 105 (majority opinion).
But, in this case, that concern is substantially diminished by
Doublestar’s concession that it is subject to personal jurisdiction in
Tennessee. Doublestar does not identify any material additional burden
it would face defending this case in Iowa instead of Tennessee. Nor does
Doublestar contend it lacks the resources to defend this lawsuit in Iowa.
This case does not involve an isolated sale or a small
manufacturer. J. McIntyre Machinery adjudicated personal jurisdiction
over a foreign manufacturer in a state where no more than four of its
33
machines (and perhaps only one) had been sold. 564 U.S. at ___, 131
S. Ct. at 2786, 180 L. Ed. 2d at 773 (plurality opinion). We share the
concern expressed in the concurring opinion for the plight of a small
manufacturer:
A rule like the New Jersey Supreme Court’s would permit
every State to assert jurisdiction in a products-liability suit
against any domestic manufacturer who sells its products
(made anywhere in the United States) to a national
distributor, no matter how large or small the manufacturer,
no matter how distant the forum, and no matter how few the
number of items that end up in the particular forum at
issue. What might appear fair in the case of a large
manufacturer which specifically seeks, or expects, an equal-
sized distributor to sell its product in a distant State might
seem unfair in the case of a small manufacturer (say, an
Appalachian potter) who sells his product (cups and saucers)
exclusively to a large distributor, who resells a single item (a
coffee mug) to a buyer from a distant State (Hawaii).
Id. at ___, 131 S. Ct. at 2793, 180 L. Ed. 2d at 781 (Breyer, J.,
concurring in judgment).
We decide only the case before us. Doublestar is not a small
manufacturer. It manufactured over 3.1 million tires in the first nine
months of 2009 alone and sold half of those internationally, including
hundreds of thousands of tires to its American distributors in 2009. As
we await further guidance from the fractured United States Supreme
Court, we do not foreclose the possibility of revising the stream-of-
commerce test for small nonresident sellers. We recognize such
defendants may avoid personal jurisdiction when fairness and
substantial justice dictate that outcome. Meanwhile, on this record, our
existing Svendsen test is appropriate.
D. Application of the Svendsen–World-Wide Volkswagen Test
to Doublestar. We conclude Doublestar is subject to personal
jurisdiction in Iowa under the stream-of-commerce test set forth in
34
World-Wide Volkswagen and Svendsen. First, we hold Doublestar has
the requisite minimum contacts with Iowa. In 2008–09, Doublestar
shipped 12,681 tires directly to Des Moines, Iowa, for Voma.
Doublestar’s employees knew from the shipping documents these tires
were going to “Des Moines, IA,” and it is irrelevant that they were
unaware “IA” stood for the State of Iowa. 7 Moreover, indirect shipments
count. Voma shipped the accident tire and another 998 tires of the same
model from Tennessee to Iowa for sale in this forum. Doublestar sold
180,000 tires to Voma for the U.S. market, and Voma shipped 16,700 of
those tires to Holt for sale in Iowa. We are satisfied Doublestar at least
indirectly served the Iowa market through Voma “with the expectation
that [its tires] would be purchased by consumers in the forum State.”
World-Wide Volkswagen, 444 U.S. at 298, 100 S. Ct. at 567, 62 L. Ed. 2d
at 502; see also Svendsen, 304 N.W.2d at 430–31 (noting minimum
contacts are established when the manufacturer puts its goods into the
stream of commerce with the expectation they will be marketed for sale
in the forum). 8
Nor can Doublestar avoid jurisdiction here by using intermediaries
to serve the American and Iowa markets. See Clune, 233 F.3d at 543–44.
7The tires shipped from China directly to Iowa did not include the 10-ply
accident tire or that model. But, Doublestar cites no authority, and we found none,
supporting the proposition that we must disregard for jurisdictional purposes a
manufacturer’s shipments to the forum state of thousands of tires of a different model
than the accident tire. Moreover, the Books allege the tires shipped directly to Iowa,
although different models, had the same defective bead design as the accident tire.
8The nature of the alleged defect in this case—a tire prone to exploding during
mounting on a mismatched rim—creates a risk of accidental injury likely to occur in the
forum where the tire is sold because the tire must be mounted on the wheel rim prior to
use. Doublestar thus can more readily foresee litigation in the state of sale, despite the
inherent mobility of the product. This is not a case involving a consumer purchaser
who brought a product purchased elsewhere into the forum state. Nor does this case
involve a tire defect that causes blowouts while the operator drives the vehicle. In such
cases, the location of the accident is fortuitous.
35
We agree with Justice Ginsberg that a manufacturer cannot “ ‘Pilate-like
wash its hands of a product by having independent distributors market
it.’ ” J. McIntyre Mach., 564 U.S. at ___, 131 S. Ct. at 2795, 180 L. Ed. 2d
at 782 (Ginsburg, J., dissenting) (quoting Weintraub, 28 U.C. Davis L.
Rev. at 555). Under the test Justice Brennan articulated in Asahi, it is
not necessary for a manufacturer to market the final product itself, “[a]s
long as [it] is aware that the final product is being marketed in the forum
State.” Asahi, 480 U.S. at 117, 107 S. Ct. at 1034, 94 L. Ed. 2d at 107
(Brennan, J., concurring in part and concurring in judgment) (emphasis
added). That awareness is shown by the direct shipments from China to
Des Moines. Doublestar sold the tires to Voma in China and transferred
the commercial risk of loss during shipping by delivering the tires F.O.B.
at the Chinese port, but that mode of sale and shipment does not create
immunity from tort liability or preclude jurisdiction in the destination
where the tires are shipped. See Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438
F.3d 465, 471–72 (5th Cir. 2006) (“[W]e conclude that a F.O.B. term does
not prevent a court from exercising personal jurisdiction over a non-
resident defendant where other factors, such as the quantity and
regularity of shipments, suggest that jurisdiction is proper.”).
Having determined Doublestar has the requisite minimum contacts
with Iowa, we next must decide “ ‘whether the assertion of personal
jurisdiction would comport with “fair play and substantial justice.” ’ ”
Capital Promotions, 756 N.W.2d at 834 (quoting Burger King Corp., 471
U.S. at 476, 105 S. Ct. at 2184, 85 L. Ed. 2d at 543). To make this
determination, we consider
“ ‘the burden on the defendant,’ ‘the forum State’s interest in
adjudicating the dispute,’ ‘the plaintiff’s interest in obtaining
convenient and effective relief,’ ‘the interstate judicial
system’s interest in obtaining the most efficient resolution of
36
controversies,’ and the ‘shared interest of the several States
in furthering fundamental substantive social policies.’ ”
Id. (quoting Burger King Corp., 471 U.S. at 477, 105 S. Ct. at 2184, 85
L. Ed. 2d at 543). “ ‘[W]here a defendant who purposefully has directed
his activities at forum residents seeks to defeat jurisdiction, he must
present a compelling case that the presence of some other considerations
would render jurisdiction unreasonable.’ ” Shams, 829 N.W.2d at 857
(quoting Burger King Corp., 471 U.S. at 477, 105 S. Ct. at 2184–85, 85
L. Ed. 2d at 544). As the Burger King Court further observed, “[m]ost
such considerations usually may be accommodated through means short
of finding jurisdiction unconstitutional.” Burger King Corp., 471 U.S. at
477, 105 S. Ct. at 2185, 85 L. Ed. 2d at 544. We hold the exercise of
personal jurisdiction over Doublestar comports with fair play and
substantial justice.
We first address the burden on the defendant of litigating in this
forum. Significantly, Doublestar has conceded it is subject to
jurisdiction in Tennessee and has not shown defending this case here
would be more burdensome than in that state. Next, the interest of
plaintiffs and the State of Iowa strongly favor jurisdiction here. A
Tennessee forum would be far more burdensome for the Books compared
to their home county. Their interest in obtaining convenient relief at
home clearly outweighs Doublestar’s interest in avoiding Iowa in favor of
Tennessee. “The State of Iowa has a strong interest in protecting its
residents from damages resulting from the tortious acts of nonresident
defendants.” Svendsen, 304 N.W.2d at 431. Here, as in Svendsen, the
injury occurred to an Iowa resident using defendant’s product in Iowa.
We recently reiterated that “Iowa has an interest in providing a forum for
an “ ‘ “effective means of redress for its residents.” ’ ” Sioux Pharm, ___
37
N.W.2d at ___ (quoting Ostrem, 841 N.W.2d at 903). “Iowa’s interest in
adjudicating a dispute concerning a tort that [oc]curred within its
borders and [plaintiff's] interest in obtaining convenient relief outweigh
any inconvenience to [defendant].” Shams, 829 N.W.2d at 860.
Systemic judicial interests also favor jurisdiction in Iowa because
the key occurrence and damages witnesses are located here, not
Tennessee. The trial would require testimony by the Books regarding the
accident and Dylan’s injury and recovery. Other witnesses located in
Iowa include Cody Donnelly, who was present when the tire exploded, as
well as the first responders, the dozen medical witnesses who treated
Dylan, and possibly the employees of the former defendant Hunter
Engineering who designed and sold the allegedly defective tire mounting
machine. 9 Testimony of Iowa witnesses could be presented in Tennessee
by deposition, but live, in-court testimony is preferable. See Burke v.
Quick Lift, Inc., 668 F. Supp. 2d 370, 382 n.11 (E.D.N.Y. 2009) (“[C]ourts
have recognized that ‘[d]epositions, deadening and one-sided, are a poor
substitute for live testimony especially where, as here, vital issues of fact
may hinge on credibility. In determining credibility, there is nothing like
the impact of live dramatis personae on the trier of the facts.’ ” (quoting
Polaroid Corp. v. Casselman, 213 F. Supp. 379, 382 (S.D.N.Y.1962)));
State v. Rogerson, 855 N.W.2d 495, 504, 507 (Iowa 2014) (discussing
value of in-court testimony and reversing order that allowed remote real-
9Hunter Engineering is a released party whose fault could be included on the
verdict form. See Iowa Code § 668.3(2)(b). Although Voma witnesses may be located in
Tennessee, it appears unlikely Voma would be on the verdict form as a released party,
given the statutory immunity available to distributors under Iowa Code section 613.18.
Voma witnesses had relevant knowledge regarding jurisdiction; that issue is resolved in
this opinion. Doublestar does not argue Voma witnesses located in Tennessee will be
testifying at trial.
38
time testimony by video in criminal trial). These practical considerations
favor trial in Iowa over Tennessee.
IV. Disposition.
For these reasons, we hold that Doublestar is subject to personal
jurisdiction in Iowa. Accordingly, we reverse the jurisdictional ruling of
the district court and remand the case for further proceedings.
REVERSED.