605 F.Supp.3d 1051
M.D. Tenn.2022Background
- Cabinets To Go, LLC (CTG), a Tennessee company, requires suppliers to verify country of origin because tariffs, ADs, and CVDs vary by source and affect its costs.
- Haiyan (China) is CTG’s supplier and owns Drouot (China), Alno (Malaysia), and Valleywood (Ohio).
- After CTG stopped taking China-made goods in 2019, Haiyan representatives traveled to Tennessee in 2019–2020 and solicited CTG on the basis that products would be manufactured in Malaysia (via Alno).
- CTG purchased roughly $950,000/month of product from Haiyan (Feb 2020–July 2021). In mid-2021 CTG learned shipments represented as Malaysian were actually manufactured in China; CBP required import of containers and CTG paid about $650,000 more in tariffs.
- CTG sued asserting, among other claims, a Tennessee Consumer Protection Act (TCPA) claim based on misrepresentations of country of origin; Haiyan, Drouot, and Alno (HDA) and Valleywood moved to dismiss for lack of personal jurisdiction and failure to state a claim.
- The court denied dismissal as to Haiyan (personal jurisdiction exists; TCPA claim sufficiently pleaded) but dismissed Valleywood and Drouot for lack of jurisdiction and dismissed Alno without prejudice for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over Haiyan | Haiyan purposefully availed itself by multiple trips to Tennessee, soliciting CTG, forming contracts, and shipping goods to Tennessee | Haiyan contested sufficient forum contacts and argued venue improper if jurisdiction lacking | Court: Specific jurisdiction exists over Haiyan (purposeful availment, claim arises from those contacts, fairness factors favor Tennessee) |
| Whether CTG stated a TCPA claim against Haiyan | Misrepresenting country of origin (China vs Malaysia) affected product "standard/quality/grade" because origin determined tariff exposure; CTG alleged $650,000 ascertainable loss | Haiyan: country-of-origin misrepresentation is outside TCPA’s scope | Court: TCPA claim pleaded plausibly; country-of-origin misrepresentation can fall within TCPA when it impacts agreed origin and causes ascertainable loss |
| Whether the court has personal jurisdiction over Valleywood (Ohio) | CTG alleged Valleywood is controlled by Haiyan and part of the same enterprise; ergo jurisdiction via parent contacts | Valleywood: no specific or general contacts with Tennessee; allegations are conclusory | Court: Dismissed Valleywood for lack of personal jurisdiction—conclusory control allegations insufficient |
| Whether the court has personal jurisdiction over Drouot (China) and Alno (Malaysia) | CTG alleged they are Haiyan subsidiaries and that Alno was to manufacture goods for CTG (and allegedly did not) | Defendants: lack of continuous/systematic contacts or forum-related acts by those entities | Court: Drouot dismissed for lack of jurisdiction; Alno dismissed without prejudice for lack of jurisdiction (allegations too vague to permit jurisdictional discovery) |
Key Cases Cited
- International Shoe Co. v. Washington, 326 U.S. 310 (established minimum contacts due process standard for personal jurisdiction)
- Youn v. Track, Inc., 324 F.3d 409 (6th Cir. 2003) (three-part test for specific jurisdiction: purposeful availment, relatedness, fairness)
- Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883 (6th Cir. 2002) (plaintiff’s complaint and affidavits can establish prima facie jurisdictional facts)
- Kerry Steel & Iron Works v. Paragon Indus., Inc., 106 F.3d 147 (6th Cir. 1997) (prima facie burden for jurisdictional showing)
- Miller v. AXA Winterthur Ins. Co., 694 F.3d 675 (6th Cir. 2012) (general vs. specific jurisdiction discussion)
- Bridgeport Music, Inc. v. Still N The Water Pub., 327 F.3d 472 (6th Cir. 2003) (state long-arm construed coterminous with due process limits)
- Intera Corp. v. Henderson, 428 F.3d 605 (6th Cir. 2005) (fairness factors in specific jurisdiction analysis)
- First Nat. Bank of Louisville v. J. W. Brewer Tire Co., 680 F.2d 1123 (6th Cir. 1982) (inference that fairness is satisfied once purposeful availment and relatedness shown)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards require plausible factual allegations)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must be more than mere labels and conclusions)
- Fritz v. Charter Twp. of Comstock, 592 F.3d 718 (6th Cir. 2010) (Rule 8 plausibility standard applied in the Sixth Circuit)
- Tucker v. Sierra Builders, 180 S.W.3d 109 (Tenn. Ct. App. 2005) (elements of a TCPA claim and liberal construction of the statute)