*1 of Tennessee STATE TRADING TOBACCO
NV SUMATRA
COMPANY. Tennessee,
Supreme Court
at Nashville. 14, 2012 Session.
June
March *3 appeal
This concerns whether Tennessee may courts exercise personal over an cigarette Indonesian manufacturer whose were sold through the marketing efforts of a Florida entrepreneur purchased who the cigarettes from an independent foreign distributor. From 2000 to over eleven million of *4 the Indonesian cigarettes manufacturer’s were sold in Tennessee. After the manu- facturer withdrew from the market, State of Tennes- see filed suit against the manufacturer in Chancery County, Court for Davidson alleging that the manufacturer had failed pay into the Tobacco Manufacturers’ Escrow Fund required by Tenn.Code (2001 §§ Ann. 47-31-101 to -103 & Supp. 2012). The parties filed cross-motions for summary judgment, the trial and court dismissed the suit of personal for lack jurisdiction over the Indonesian manufac- reversed, Appeals turer. Court of granted the for summary State’s motion judgment, and the case to remanded trial court the applicable to determine fines. State ex Cooper rel. NV Sumatra Co., Trading Tobacco No. M2010-01955- (Tenn.Ct. COA-R3-CV, 2011 WL Douse, Nashville, Tennessee; Steven C. 2011). that, June App. findWe under Rissetto, Christopher and L. Washington Due Process Clause of Fourteenth D.C., appellant, for the NV Sumatra To- Amendment, courts lack per- Trading bacco Company. sonal over Indonesian Jr., Robert E. Cooper, Attorney General manufacturer. We therefore reverse the Reporter; and Young, William E. Solicitor Appeals decision the Court of and dis- General; Sinclair, Jr., John H. Deputy At- miss the case personal jurisdic- for lack of General; torney Baker, and Rebekah A. 12.02(2). pursuant tion to Tenn. Civ. P. R. General, Attorney Assistant appel- lee, State of Tennessee. I.
OPINION This case place takes in shadow of a KOCH, JR., J., WILLIAM C. delivered litigation nationwide settlement of con- opinion Court, of the which cerning the of the responsibility leading M. JANICE HOLDER and CORNELIA companies tobacco in the United States for CLARK, JJ., WADE, A. GARY joined. R. the costs the treatment C.J. filed a associated with dissenting opinion, which LEE, J., SHARON G. joined. tobacco-related conditions. health Be- lawsuits, of this the United States.6 The terms over 800 tween 1993 are contained the Master more than settlement class actions and including 55 (“MSA”).7 claims, against Agreement Settlement were filed 600 individual damages companies seeking the tobacco types tobacco The MSA creates three the harmful effects of relief for other type includes the companies. first among these lawsuits smoking.1 Included Participating Manufacturers Original were filed states.2 actions (“OPMs”) companies tobacco —the entered the MSA.8 The sec- July May originally into Between type Subsequent includes the Partici- with four states ond companies tobacco settled (“SPMs”) so, to- and, Manufacturers pay pating these states doing agreed —the but joined the MSA damages.3 companies On November bacco billion $36.8 currently 23, 1998, are not the OPMs.9 There are negotiations between following SPM companies companies tobacco over 50 tobacco representatives eight category, companies represent and these team of state attor- negotiating largest cigarette neys remaining four domestic most 2% the general,4 the *5 type The the companies, controlling 98% of the market.10 third includes tobacco States,5 Non-Participating Manufacturers cigarette market in the United (“NPMs”) states, companies are remaining tobacco 46 settled —the Columbia, part five and territories of of the MSA.11 District of co,” Lindsey Chepke, Summary, 2 J. Health 1. Sloan & M. The Tobacco Settlement Frank A. (1998). Pol'y 167 Care L. & Law Economics Public Health 83 and (2007). Director, Bulow, Jeremy 5. See Bureau of FTC Economics, and The State Tobacco Settlements Archives, Tobacco Control Tobacco Liti- See Antitrust, http://www.ftc.gov/ available at Lawsuits, Documents, gation State UCSF Li- ("Bulow”). speeches/other/abatobacco.shtm http://library.ucsf.edu/ brary, available at tobacco/litigation/states. Tennessee was signatories agreement 6. The on the settlement eight among the states that did not sue the Morris, Inc., Philip Reynolds included R.J. Gregory Traylor, companies. W. tobacco Co., & Tobacco Tobacco Brown Williamson Tobacco, Note, Big Medicaid-Covered Corp., Together, Tobacco Lorillard Co. Smokers, Master Set- Substance companies these had a market share 98% 1081, Agreement, Vand. L.Rev. tlement 63 The cigarette sales in the United States. (2010) ("Traylor”). n.104 1096 Liggett Group signed also the settlement 5; Bulow, agreement. supra See Sloan note Viscusi, Kip 3. W. Rooms: A Smoke-Filled Chepke, & 17 Widener L.Rev. at 170. (2002) on the Tobacco Deal 37 Postmortem Derthick, ("Viscusi”); Martha Federalism and (1998), Agreement 7. Master Settlement avail- Tobacco, 31 Publius: The Jour- Politics of http://oag.ca.gov/tobacco/msa. able at 1, Federalism, 47, (Winter nal no. 52 2001); Lindsey Chepke, Frank Sloan & Liti- II(hh). § 8. MSA Settlement, gation, and the Public Welfare: Agreement, Lessons the Master Settlement from II(tt). § 9. MSA 159, (2011) ("Sloan 17 166 Widener L.Rev. & Chepke”). Participating 10. See Manufacturers under Agreement Nov. Master Settlement as of Wood, Note, 4. Seth M. Tlte Master Settlement http://www.naag.org/ available Agreement as Action: An Evaluative Class backpages/naag/tobacco/msa/participating_ Publicly manu; Fisher, Initi- Framework Settlements 338 193 Mariana F.3d for (2003); Litigation, (3d Cir.2003). ated L.Rev. 634 Va. Ward, see The and Minton Envi- also Kershaw II(cc). companies § Symposium: "Up Law in Smoke: 11. MSA These "almost ronmental exclusively cigarettes” Coming Legacy with the of Tobac- market discount brand to Terms settling agreed provides states to dismiss MSA that states can avoid the and to their pending impact Adjustment by their lawsuits release of the NPM adopt- against past and future claims the OPMs a “qualifying statute.”14 The purpose agreed SPMs. In return the OPMs of this statute is to neutralize the NPMs’ regulatory make several advantages by concessions12 cost requiring them either pay- monetary join make substantial the MSA or to establish escrow ments to the states.13 reserve account to secure damage any awards for successful cigarette-related financial obligations NPMs have no claim might the state from obtain Accordingly, under the MSA. were they NPM. The amount of annual pay- these cigarette able “enter the market and cigarettes ments is based number average well below the price sold an NPM during particular year. price facing any OPM’s without conse- (Creek) Pruitt, Muscogee Nation v. quences Traylor, under the MSA.” (10th Cir.2012). F.3d Any protect Vand. L.Rev. at 1105. To remaining funds in an NPM’s escrow ac- price competition OPMs from count are restored to years the NPM 25 NPMs, the MSA provides a “Non- they placed after have been account. Participating Share Adjustment” Market Nations, Grand River Enter. Six Ltd. v. (“NPM IX(d)(2). § Adjustment”). MSA (2d Cir.2007). Pryor, F.3d adjustment This re- permits OPMs to their financial obligation duce annual was one of the 46 states that *6 they the states if lose market an share to 23, approved the MSA on November 1998. NPM. 1999, In the Tennessee Assembly General possible The an- decrease an OPM’s enacted the “Tennessee Tobacco Manufac- payments nual have serious could financial turers’ Escrow Fund Act 1999”15 in consequences satisfy order Traylor, requirements for the states. to of MSA IX(d)(2)(E). § § L.Rev. at 1106. Accordingly, Vand. Ann. Tenn.Code 47-31- companies agreed are "often payments and were not in the OPMs to also make annual Chepke, U.S. market in Sloan & 1998.” perpetuity to an escrow fund that would be Widener L.Rev. at 171. paid an out states based on allocation agreed formula to the states. MSA agreed The 12. OPMs IX(c). payments § The amount of these does advertising, to sponsorship, restrict their depend ciga- the volume of sales of activities, lobbying, litigation particu- Corp. each & G rettes within state. KT v. larly targeted youth; as those activities to Okla., Attorney Gen. F.3d at 1120. specific disband three "Tobacco-Related April April ag- Between 2000 and Organizations,” cre- and to restrict their gregate payments amount of the annual ation participation in trade associa- $190 will Kip the OPMs total billion. W. tions; generally to make available to Viscusi, A Smoke-Filled Rooms: Postmortem public documents the OPMs had disclosed (2002). on the Deal 44 Tobacco during discovery phase litiga- of their states; settling tion with the and to create IX(d)(2)(E). § 14. MSA The MSA includes a fund the National Public Education Foundation, reducing youth dedicated to model as "Exhibit statute T.” smoking preventing diseases associated smoking. with 17, 1999, May 15. Act of ch. 1999 Tenn. Okla., Attorney Corp. & G KT Gen. (codified Pub. 630-35 as amended Acts Cir.2008). (10th F.3d §§ at Tenn.Code Ann. to -103 47-31-101 (2001 Supp.2012)). & agreed $12.7 OPMs make billion up-front payments between 1998 and 2003. IX(b). Beginning April §MSA 103(a) “[a]ny already arrange- Sumatra had made tobacco NV requires selling cigarettes cigarettes. to consum- ments for the distribution of its manufacturer after cigarettes state Tennessee” It sold its brand to Uni- ers within the United 26, 1999, partici- Pte., (“Unico”), Trading either become May bo Ltd. a distribu- by joining the MSA turn, pating manufacturer In company Singapore. tion based making payments “quali- into a begin or to cigarettes Unico sold the United brand fund.” fied escrow (“Silmar”), Trading, Ltd. a tobacco Silmar based in the British company
distribution Thus, Mr. Battah Virgin Islands. when II. purchasing contacted NV Sumatra about (“Pacific Duty Free Pacific Coast States, cigarettes in the United he to sell California, Coast”), located in company Hawe, em- was referred to Nabil a Silmar large quantity cigarettes purchased a Kingdom. ployee residing United cigarette manufacturer from Indonesian Hawe arrange- Mr. Battah and Mr. made Trading Company named NV Sumatra import ments to Mr. enable Battah Sumatra”). (“NV were la- cigarettes cigarettes United brand into the United cig- beled brand “American Blend” United Thus, way States. on their from NV Su- arettes. was unsuccessful in Pacific Coast Battah, cigarettes passed matra to Mr. marketing cigarettes in the these United through independent least these two to sell them in bulk to States and decided companies.16 distribution Pacific another Coast distributor. inventory sold its entire of United brand Because a highly regulated tobacco is cigarettes entrepreneur to a Florida business, com- required Mr. Battah named Basil Battah. ply regulatory number of hurdles importing before brand United At one Mr. Battah owned and point, into the States. Sumatra had operated company a car alarm named *7 already obtained States trade- United Security. American In Automotive cigarettes. marks for its United brand Security American Automotive started do- lawyer arrangements Mr. Battah’s made (“FTS”) as FTS Distributors business between NV Sumatra and United began cigarettes. importing Nobody and government to that States ensure marketing else was United brand “Ameri- cigarettes complied United brand with the Blend” cigarettes can the United States requirements rotating for the warn- FTC’s Mr. Battah Pacif- purchased when ings cigarette packages. attorney on remaining inventory ic Coast’s of United also took to file the infor- steps required cigarettes He cigarettes. brand took the regarding cigarettes’ ingredi- mation industry to tobacco trade shows and adver- Department ents with the Health and magazines. tised them in trade Before Human Services. In a letter dated March long, pur- he all to sold them and decided 30, 1999, lawyer Mr. Battah’s reminded cigarettes chase from NV Sumatra. more him that had to with all “comply would he also hoped Mr. Battah also that he be enough regarding able to state local laws the sale generate sales to convince products,” including NV him the distribution of tobacco grant Sumatra to exclusive right “any may state laws that be in cigarettes and sell its escrow distribute force.” United States. tion, Pacific, Ltd., appears 16. The to reveal the Orient based in the United record also exis- intermediary corpora- Kingdom. tence of an additional ensure steps being After that He taking were sold. also included future cigarettes legally be projections brand could marketing United sales and his strate- States, imported the United Mr. Bat- into gies requested grant that NV Sumatra tah efforts to cultivate a market began his him an agreement exclusive distribution goal for the His was to sell cigarettes. the United States. NV Sumatra’s re- 1,000 brand ciga- master cases17 United was he sponse hoped. not what had In a fifty rettes in each of the He cre- states. impersonal rather letter July dated advertisements, ated magazine assembled 2001, Timin Bingei, NV Sumatra’s execu- a booth with an illuminated brand United director, tive stated: logo, point-of-sale post- and obtained some TO WHOM IT MAY CONCERN he ers from Sumatra. Then started hereby certify We that we are the owner tobacco attending annual distributor trade of the registered “United” trademark Vegas shows in Las he marketed where with the Patent cigarettes regional smaller distribu- Trademark office International Class regional tors.18 Three distributors 34 (cigarettes). We appointed have Uni- purchased cigarettes United brand co Trading Pte. Ltd. as our cigarettes Singapore from Mr. Battah sold Tennes- agent sole marketing ciga- see.19 for sale and bearing rettes the trademark “United.” May United States Customs hereby We further state we consent Service FTS packaging notified that the to allow Trading ap- Unico Pte. Ltd. to cigarettes confusing the United brand point Limited, Trading Silmar British cigarettes’ because origin Indonesian Virgin exclusive-buyer Islands to was not conspicuous enough and because to distribute cigarettes “United” sale wording on the “American Blend” in the United States America. This also package, which featured red and white certification remains valid Decem- until stripes drawing flying eagle, and a of a given ber solely 2001 and above appeared suggest serve purpose importing prod- were made United States. Mr. ucts into the United States of America. Battah’s was able lawyer to convince the legal This certification will not have grant Customs Service to for the waiver binding compa- liabilities to [sic] and packages inventory already in his had nies mentioned above or the under- However, printed. been the Customs Ser- *8 signed. vice no insisted that other United brand cigarettes could be sold in the United Company Trading NV Sumatra Tobacco changed.
States until that packaging was Timin Bingei Director —Executive by this Mr. development, Undaunted Battah report sent a sales to NV Sumatra When Mr. Battah was shown this letter documenting many ciga- during deposition, how brand it explained United his first he they rettes he where selling had been and as follows: would, turn, cigarettes ciga-
17. A case of contains in master wholesalers who sell cigarettes. cartons of Each carton contains gas rettes to retail such and outlets as stations packages, package and each contains 20 grocery stores. cigarettes. Accordingly, a case con- master 10,000 cigarettes. tains 19.By ciga- FTS had sold United brand regional ciga- rettes to distributors who sold regional customarily 18. These distributors and rettes in Tennessee fifteen other states. purchased cigarettes and them to then sold The facsimile also noted that these state the exclusive distribution asked for We civil ac- writing attorneys general ... an could initiate put] to [contract compel compliance with the Es- between tions to to be made agreement [FTS penalties. Fund Act and seek civil we were crow Sumatra] and because NV The facsimile also stated: “Since United money trade- a lot this spending are and cigarettes imported distributed establishing its marketabil- mark and on Florida, subject is not Miami which to a lot more. ity spend and wanted Fund, in- of the Escrow but requirements they And came back with letter.... require directly distributed to states which to a lot ener- going expend were [W]e Fund, time, please an FTS to money request on this and Escrow gy, re- lawyer” with their on how to [t]hey us check keep going.... wanted [But] spond to the notice. with these oth- agreements to make our companies.... er for Mr. Battah to continue order Mr. Battah and FTS encountered anoth- cigarettes selling United brand Hawe, July 24, States, er setback. On Mr. needed Sumatra to United he NV employee Kingdom, Silmar’s the United cigarette satisfy to change packages he copy Service, sent Mr. Battah a of a facsimile States Customs he United had Sumatra’s Interna- received NV join also needed NV Sumatra either to Sales, Trade, Depart- tional Services open to accounts in all the MSA or escrow ment. The facsimile read: MSA-compliant in which states Ac- cigarettes being brand were sold.21 report cigarettes
Your on the United requested Mr. cordingly, represen- Battah you ago to us time stated faxed some Sumatra, Unico, Silmar tatives of cigarettes pur- the said can be him meet in Miami address these California, Texas, Washington, chased in Mr. meet- Bingei issues. decided that the Louisiana, Arizona, Mississippi, Georgia, Beijing, should be held China in- Carolina, Hamp- South New and North stead. shire, Oklahoma, Tennessee, and Ken- tucky. Most of States mentioned [the] Bat- During meeting Beijing, Mr. are Act. subject to Escrow Fund [the] presented illustrating tah how information wondering many being We were importer are whether United brand any ac- in each He also party opened provided escrow sold state. Attorney participants count with the States General. with information about We from the of MSA and state escrow funds statutes. notice Office receive[d] Attorney advantageous He insisted the most General 45 States Tennessee, subject path begin escrow for NV such Sumatra would be California, Pennsylva- paying New into the various state funds. Hampshire, escrow nia, resolved, etc., Bat- request wheth- Once these were Mr. confirmation issues *9 cigarettes hoped er sold in their tah also that NV Sumatra would our were grant him an to distrib- opened States and whether we have an exclusive contract in the cigarettes account related to the escrow fund.20 ute its United States. experience, prior 20. The no- Based on Mr. Battah record contains Escrow Fund Act 21. permitted open that he not be knew would Attorney tices from the Gener- sent escrow himself. He had tried these accounts Sumatra, al’s office to NV dated March 21 past in the to fund escrow accounts other 7, 2001, May April 2002. brands, cigarette imported but the states had money. returned the (Tenn.2009), Mr. Beijing meeting, As result of the S.W.Bd that a trial 12.02(2) the packaging hearing Battah believed that issues court a Rule motion “must but what would be resolved was unsure take as true all the in allegations plain- regarding NV Sumatra’s decision the state complaint tiffs and supporting papers, if be. He for a hoped any, escrow accounts would and must resolve disputes all factual favor,” resolution quick plaintiffs that, and definitive of these we also stated stock of issues because his United brand “in considering complaint addition rapidly depleted. cigarettes being supporting affidavits, and the or opposing may, particularly the trial court in complex Mr. Battah also recalled that one or two cases, discovery allow limited [or] hold an were in meetings additional held Miami. evidentiary hearing.” Accordingly, we It is not clear from the record or whether clarify wish to that a court trial is not when these occurred. There is meetings obligated accept factual allega- true independent no corroboration these tions, as Mr. such Battah’s illusive Miami meetings, testimony and Mr. Battah’s meeting, that are controverted more is In meetings about these inconsistent. plainly reliable evidence and lack credibili- deposition, first Mr. Battah that his stated ty.22 meeting Beijing only was “the time met anyone with from NV Sumatra [he] Even if these meetings place, did take person,” and that no one from NV Suma- they not work did out well for Mr. Battah. tra ever came to the United States to meet January February Mr. Battah with him. In an May affidavit dated discouraging telephone received a call 2010, NV Sumatra’s international sales representative. from an NV Sumatra manager stated cor- “[NV Sumatra’s] caller informed Mr. Battah that NV Suma- porate any trip records do not reflect to tra change had decided not to the packag- by anyone the United States from [NV ing cigarettes United brand during period the time Sumatra] join NV Sumatra did not intend to through Similarly, 2004.” Mr. Battah’s at- MSA or to establish escrow state funds. torney May claimed in his 2010 affida- The caller also informed Battah Mr. possessed vit he “no recollection” withdrawing NV Sumatra was from the of any meeting represen- no records and, cigarette market United Sumatra, Unico, tatives from NV or Silmar therefore, would not an enter into exclu- in Miami in 2001 2002. sive distribution contract with FTS.
Therefore, call, after allegation Shortly telephone Mr. Battah’s FTS (from deposition February inventory his second sold the last of its of United 2010) representatives that NV Sumatra venture at cigarettes. brand With this an end, him in Mr. Cig- met Miami is contradicted Mr. Battah started the American prior testimony, Company, Battah’s own the testimo arette which manufactures its told, attorney, testimony of his own All ny cigarettes. and the own Mr. Battah sold stated, Although NV Sumatra. we United brand Inc., Hosp., Gordon Greenview States from 1999 to 2002. required party. Nor court to accredit included NV Sumatra as a Mr. Battah conclusions, legal possesses affiant's such as Bat- demonstrated that he Mr. *10 necessary relationships expertise tah’s of the be- to draw conclusions of characterizations sort, tween NV com- and the no Sumatra and distribution this record contains docu- support panies, mentary or Mr. belief that an other reliable Battah’s he had evidence informal, agreement “oral” that them. distribution us make our Sumatra] wanted [NV
III. agreements companies with these other 5, 2003, the State On June and make agreements we didn’t want to NV Sumatra against filed suit companies. with other wanted these We Chancery The County Court. Davidson agreements with the trademark make NV alleged that Sumatra had lawsuit and the manufacturer of the owner into a deposit qualified funds es- failed to directly.... they wanted [But] Tenn.Code required account crow through companies to run it these other original complaint § Ann. 47-31-103. ... to have in-be- they wanted filters cigarette sales made Tennes- concerned tween them. 2001, but it was later in 2000 and see vein, record an similar contains made 2002. to include sales amended from NV international affidavit Sumatra’s According to Tennessee’s licensed tobac- 25, 2004, manager, sales dated October reports joint stipula- and the co distributor stating that NV Sumatra “does have 11,592,800 total parties, tion of the any relationships FTS” contractual with were in Ten- cigarettes sold United brand any company other that NV Suma- sells on these nessee from Based tra’s Tennessee. sales, alleged that Sumatra the State NV discovery, At close of parties deposit a total of obligated was stipulation filed a and joint cross-motions $168,316.83into a qualified escrow account. judgment. hear- summary for Before the Additionally, the that State claimed NV ing on motions summary judgment subject to civil penalties Sumatra was held, the could be State received new in- unpaid escrow amounts up to 300% formation from Mr. Battah. February On attorney’s State’s costs fees. 1, 2010, trial court ordered additional NV Sumatra On October discovery, including deposition second complaint for lack moved to dismiss of Mr. Battah. under R. personal jurisdiction Tenn. Civ. During deposition his second on Febru- 12.02(2). The court P. trial conducted a 23, 2010, ary Mr. Battah described how he 6, 2006, September and on issued hearing, tried to re-establish with connections NV opinion denying a memorandum mo- company Sumatra 2004. He sent the point, discovery tion. At that commenced. draft exclusive distribution contract. NV contract, deposed Mr. Battah in Fort Sumatra returned the draft with parties contracting party. on October 2008. Mr. Bat- Unico substituted as the Lauderdale said, tah that he he had Battah “I explained point,” prob- “[A]t believed Mr. NV agreement ably just my oral with Sumatra estab- threw up hands with these they just get lishing guys, FTS as NV Sumatra’s exclusive don’t it.” Mr. Upon Battah “pretty upset” distributor United States. NV Suma- however, companies it became tra’s questioning, many further “insistence to stick mind, all of abundantly clear that Mr. Battah’s in between” them. In Mr. Battah’s were Silmar agreements merely with or Unico and Mr. Hawe Unico were brokers. fastidiously had NV Sumatra avoided He believed real relationship “[t]he directly. myself Mr. dealing Battah NV Su- was between Sumatra. They matra Battah I them.” cigarettes], [the rebuffed Mr. and consistent- made sold ly opinion, “[everybody that he deal with In Mr. Battah’s insisted Unico and else Silmar instead. Mr. Battah himself testi- in between was smoke screens and mirrors fied unnecessary.” and were *11 n deposition, Trading Mr. After Battah’s second and that FTS shipped millions parties supplemental filed briefs in of cigarettes to a free-trade zone in Mia- of their motions for support respective mi, Florida.
summary judgment. The motions were The trial court also that jurisdic- noted its on On argued August June over tion NV by Sumatra limited granted the trial court NV Sumatra’s Due Process Clause of the Fourteenth summary for The judgment. motion trial Amendment to the United States Constitu- jurisdiction court held that it had no over tion. After analyzing the substance of this company. The noted court several Due Process on power, restriction its relevant, uncontested facts: court concluded: reflect uncontested facts that no analyzed courts have the Due employee Sumatra ever traveled to Ten- Process require Clause to something nessee for of purpose conducting more than that the defendant was aware business, employee that no Sumatra of product’s entry its into Tennessee any ever initiated contact with individual through the stream of commerce in or- Tennessee, entity in or that Suma- der to exert over the defen- cigarettes any tra does not sell in Ten- dant. In light, requires the Court directly through nessee agent. or its some evidence that Sumatra did some- Further evident from uncontested thing more purposefully directed at Ten- facts that Sumatra owns U.S. trade- nessee than act placing the mere of ciga- placed mark for the United-brand on its rettes into the stream commerce. cigarette packages that the ingredi- Absent such proof, the Court cannot ex- report ciga- ent for the United-brand specific ercise over rettes had been filed with the Federal Sumatra. (“FTC”) Trade in Washing- Commission perfected appeal State ton, addition, the parties D.C. stipu- Appeals. opinion In an handed lated that cigarettes United-brand 28, 2011, down June Ap Court of labeled with Surgeon are the U.S. Gen- peals reversed the court trial and remand warning dangers eral’s about ed case with directions to enter smoking required U.S. law and summary judgment the State. packaging that State United-brand identi- rel. product Cooper fies the ex Sumatra as an American blend. Tobacco Co., Trading No. M2010-01955-COA-R3- purposes summary judgment For CV, (Tenn.Ct. 2011 WL at *32 only, dispute the State does not 2011). June App. Disagreeing with the or any Sumatra does not own have inter- trial court’s assessment of NV Sumatra’s est Trading UNICO Silmar nor Tennessee, with contacts the court found any does Sumatra have contractual rela- “the intentionally manufacturer used tionship with Trading permitting Silmar system a distribution desired re authorizing the sale United-brand selling fifty states, in all sult cigarettes in Tennessee.... The State Tennessee, including as to support so dispute does that Sumatra has no finding that the manufacturer had mini ownership interest in FTS and FTS has mum State ownership necessary no in Sumatra. contacts with the interest Also undisputed acknowledgement personal jurisdic is the invoke the exercise of President, Battah, State Cooper FTS’ Mr. tion.” ex rel. v. NV Suma FTS tra, complete ownership had the United- WL at *1. The court brand purchased policy from Silmar then made a argument “[f]or *12 738 2011, 24, August Ap should not allowed On Court manufacturers
eign peals Sumatra’s for a using petition denied NV intermedi to insulate themselves rehearing. Appeals The distin Court by pro or in a chain of distribution aries guished Machinery on McIntyre J. its fessing ignorance of the ultimate destina The noted that this case did facts. court a foreign To allow products.” tion of their product not involve “an isolated defective to “shield itself from liabili manufacturer way its into forum that found state the use of “middlemen” would ty” through through the stream commerce.” State jus legal technicality “a to subvert permit Sumatra, Cooper ex 2011 WL rel. v. NV State rel. reality.” economic ex tice Instead, 2571851, at the court em *33. Sumatra., 2571851, Cooper v. 2011 WL NV phasized that number “the of Sumatra’s Heidelberg *15 v. (quoting at Certisimo cigarettes United brand sold Tennessee Co., 298, 1, N.J.Super. 122 298 A.2d 304 more something constitutes than an isolat (1972)). Finally, the stated that “the court and, ed event” Sumatra’s contacts “[NV] theory supports per stream-of-commerce with Tennessee were neither [therefore] jurisdiction over foreign sonal manufactur isolated, nor incidental.” State ex rel. Coo like Sumatra “derive ers” NV benefits Sumatra, per 2011 v. NV WL from the distribution and sale of them held that Accordingly, *33. court products in the United States.” State ex sales of NV Sumatra’s arose Sumatra, Cooper rel. v. NV 2011 WL “the of the manufacturer efforts 2571851,at *15.23 directly indirectly to distributor serve day Appeals before the Court market for its in other States.” decision, released its the United States Thus, NV Sumatra’s to distribute “efforts Supreme published ruling its Court first product throughout States” personal twenty-four subject made it “not unreasonable” to NV Mach., v. years. McIntyre J. Ltd. Nicas Sumatra to suit in State Tennessee. ex tro, -, Sumatra, 131 S.Ct. U.S. v. Cooper rel. 2011 WL NV (2011). L.Ed.2d In J. Ma (quoting *34 Worldr-Wide chinery, Jersey Woodson, New Volkswagen the Court found that v. Corp. U.S. 286, 297, personal jurisdiction lacked over British L.Ed.2d 490 (1980)). granted appli We NV Sumatra’s manufacturer that sold an defec allegedly permission appeal. cation for tive scrap processing metal machine to Jersey company through New an indepen IV. July
dent Ohio-based
On
distributor.
seeking
NV
petition
Sumatra filed a
addressing
Before
substantive issues
of its
rehearing
case before
relating
ability
of Tennessee’s courts
Appeals.
Cooper
State ex rel.
Su
NV
personal jurisdiction
to exercise
over NV
matra,
2571851, at
2011 WL
*32. NV
case,
Sumatra under the facts of this
we
Sumatra
issue
took
with several of
attend to a
matter.
procedural
first
appellate
findings
court’s factual
ar
originally invoked
R.
Sumatra
Tenn.
Civ.
12.02(2)
gued that
court’s
was
requested
decision
inconsis P.
when
trial
tent
with the United States
complaint
court
dismiss the State’s
McIntyre Machinery
jurisdiction.
Court’s J.
decision.
lack
trial
Appeals
erly applied
23. The
we
Court of
also addressed
NV Sumatra. Because
find
questions
whether
Act
lack
the Escrow Fund
that Tennessee courts
hear
case,
prop-
we
constitutional and whether
Act
need
address these issues.
*13
motion,
(Tenn.1998);
Hines,
the
but
later
court denied
NV
Bemis Co. v.
585
574,
(Tenn.1979);
challenge
personal
Sumatra renewed its
S.W.2d
576
Tenn. R. Civ.
1
jurisdiction using
policy
a Tenn. R. Civ. P. 56 P.
(reflecting
“just,
a
favoring the
stipulated
the parties
motion. Because
speedy,
inexpensive determination of
facts,
action”)).
question
every
the trial court treated the
question
of personal jurisdiction as a
12.02(2)
A
R.
Tenn.
Civ. P.
mo
law
the complaint.
and dismissed
Because
tion to
lack
personal juris
dismiss for
the trial
proceed-
court had considered the
diction,
challenges
which
the trial court’s
summary
judgment,
one for
authority
case,
ideally
hear
ad
Appeals
Court of
did the same. State ex
Thus,
dressed as a threshold issue.
a
Sumatra,
rel. Cooper v. NV
2011 WL
may
defendant
file a Tenn. R. Civ. P.
2571851, at *7-9.
12.02(2)
prior
motion
to filing its answer or
may
give
should
include
Courts
effect
the defense in
answer.
its
may,
discretion,
substance of motions rather
than
The defendant
sup
their
its
form
Brundage
port
or title. See
v. Cumber
motion
or other
affidavits
(Tenn.
evidentiary
land
materials. The
Cnty.,
plaintiff
357 S.W.3d
371
then
2011);
bears
burden
a
making
prima
v.
facie
Abshure Methodist Healthcare-
showing
jurisdiction,
Memphis Hosps.,
based on
325 S.W.3d
104
own
evidence. When
(Tenn.2010);
Everhart,
weighing
evi
Norton v.
895
12.02(2)
dence on a
R.
(Tenn.1995).
Tenn.
Civ. P.
mo
S.W.2d
Accordingly,
tion, the trial
must
court
take all factual
the trial
should
court
have followed the
allegations
plaintiffs
in the
complaint and
procedures
applicable
hearing
supporting papers as true. The
12.02(2)
court
disposition
Tenn.
P.
R. Civ.
must
disputes
resolve all factual
challenging personal jurisdiction
motions
cases,
In
plaintiffs
complex
favor.
rather
procedures commonly
than the
as
may
limited discovery
court
allow
and hold
summary judg
sociated with motions for
hearing.
evidentiary
may
The court
ment.
hold
in abeyance
even
the motion
until
involving
per-
a recent case
general
a
Hosp.,
after
trial. Gordon v. Greenview
jurisdiction
sonal
over a non-resident de-
Inc.,
Y. the decision chinery change the law. Fi- signals two re- thorny invokes issues ease This the facts nally, we will address of this case first jurisdiction. garding personal a decision. render foreign manufacturer whether issue is jurisdic- to a state court’s may subject *14 product ar- tion that manufacturer’s when A. a of through
rives
the forum state
series
1972,
In
the Tennessee General Assem-
the
independent
intermediaries not under
bly
long-arm
statute to ex-
amended
The
control.
second issue
manufacturer’s
pand its
reach as far as con-
jurisdictional
foreign
manufacturer who
is whether
Thus,
stitutionally permissible.24
Tenn.
States
as a
targeted the United
market
2—214(a)(6)
§
personal
Code Ann.
now states
subject
jurisdic-
whole can be
20—
“[pjersons
tion
where
manufacturer’s
that
who are
state
nonresidents
sold,
have been
when the evi-
products
subject
jurisdic-
this state ... are
fails to show
manufacturer
dence
any
state
tion
the courts of this
as to
the forum
specifically targeted
state.
from,”
arising
action
claim for relief
“[a]ny
among
things,
other
basis not incon-
regarding personal jurisdiction
Issues
implicate
this
Due Pro-
sistent with the constitution
this state or
cases
as
such
Amend-
cess
Fourteenth
Clause
of the
States.” We have observed
Accordingly,
ment.
decisions
long-
this amendment “converted the
Supreme Court establish the
United States
‘single
arm statute from a
enumerated act’
personal
boundary
jurisdiction.
lines
statute
a ‘minimum
statute
contacts’
Supreme
While the United
Court’s
permitted
Tennessee
to exer-
courts
two
recent decisions
this area have
most
personal
over
cise
nonresident
rationales,
produced inconsistent
we can
limit permitted by
defendants to the full
principles
glean from them
that enable
v.
Gordon
Greenview
process.”
due
apply
long-arm
us to construe
our
Inc.,
Hosp.,
Ma-
S.W.3d at 645
(citing
in a constitutional manner. Even
statutes
Allen,
332,
sada
v.
Corp.
Inv.
S.W.2d
may
there
be cases in which it
though
(Tenn.1985));
Shelby
see also
Mut.
permissible
assert
would
Moore,
Ins. Co. v.
645 S.W.2d
245-46
foreign
over
manufacturer
(Tenn.Ct.App.1981).
through
reach
products
whose
distributors,
community
independent
legal
expressed
Some in the
series of
this
not one of those cases.
concern
precise wording
that the
of Tenn.
2—214(a)(6)
§
Code Ann.
did not actual
20 —
begin
Our
will
Tennes-
discussion
ly
jurisdictional
stretch Tennessee’s
arm
long-arm
see’s
statutes. Because these
quite
Assembly
the General
long
as
derive their content
from the
statutes
See Gordon
Greenview
intended.
Constitution,
analysis
United States
our
Inc.,
Hosp.,
(citing
S.W.3d at
645-46
will
a consideration
include
of the relevant
Future
Banks, Jr.,
General
Robert
precedents
of the United States
Tennessee, Jurisdiction in
U. Mem.
J.
Machin-
Court,
particularly
(1997)).
Accordingly,
L.Rev.
ery.
581-82
will also consider
relevant
We
Assembly engrafted
law and
another
Tennessee case
then determine
General
(2009)).
§
Apr.
ch.
Tenn.
Ann. 20-2-214
Act of
Tenn.Code
(codified
Pub. Acts
688-89
as amended
§ 20-
long-arm in 1997.25 Tenn.Code Ann.
Washington
showcase their wares. The
provides
court of
state
shoe company
“[a]
2-225
this
itself had
office in
no
(1)
oth
may
jurisdiction:
any
kept
exercise
state and
no stock
[o]n
of merchandise for
(2)[o]n
law;
any
Shoe,
er basis authorized
sale there.
International
326 U.S.
313-14,
with the
basis not inconsistent
constitution
of this state or of
United States.”26
Washington
Supreme Court held
company’s
that the
“regular
systemat
long-arm
Both of Tennessee’s
stat
ic solicitation of
through
orders”
its sales
utes,
then,
scope
derive their
persons, and the
flow of
“continuous
[In
Tennessee and
Federal Constitutions.
ternational
into the
Shoe’s]
state”
context,
interpreted
we
due
have
company
made the
amenable to suit in
protections process
Constitution
*15
Shoe,
Washington’s courts.
International
being
Tennessee as
co-extensive with those
314,
743
affair,
ingly interstate and international
defendants that the Robinsons’ Audi
said,
never accepted
injury
the Court
“we have
could cause
in Oklahoma. World-
proposition
Volkswagen,
lines are irrele Wide
state
U.S. at
jurisdictional
we, principles and remain faithful to United States Court de- interstate federalism embodied Con clined to adopt this “foreseeability” ratio- Volkswagen, stitution.” World-Wide alone,” nale. “[Fjoreseeability the Court 293, 100 at U.S. S.Ct. 559. said, “has never been sufficient bench- mark for personal jurisdiction under the light of our nation’s federalist struc- Due Process Clause.” World-Wide Volks- procedural ture its commitment wagen, U.S. at S.Ct. 559. If fairness, may a state not make binding the Court adopted plaintiffs theory, judgments against a defendant that has then “[ejvery seller chattels would in contacts, “no ties or relations” appoint effect the chattel his agent for Volkswagen, state. World-Wide 444 U.S. process. service of amenability His to suit (citing S.Ct. 559 International would travel with the chattel.” Shoe, 154). World- U.S. 66 S.Ct. This Volkswagen, Wide true, 444 U.S. at said, if the defen- “[e]ven foreseeability, While the Court dant would suffer minimal or no inconven- said, remained relevant to the analysis, being litigate ience from forced before State[,] the foreseeability that is critical the tribunals of another even if to due process analysis State is not the mere likeli- strong apply- forum has a interest in hood that a controversy[,]” way its law will find its and “even into Rather, the forum if forum State. it is that State is the most convenient *17 then, defendant’s conduct and connection litigation.” location for Even “the Clause, the forum State are such that he acting Due Process as an instru- should federalism, reasonably anticipate being of haled into may ment interstate some- court there. act power times to divest the State of its a
render
valid judgment.” World-Wide
297,
444
Volkswagen,
World-Wide
at
U.S.
294,
Volkswagen, 444
100
U.S. at
S.Ct. 559
251, 254,
2
1228,
78 S.Ct.
L.Ed.2d 1283 analysis
degree
functioned
“a
provide
of
(1958)).
system
predictability
legal
that al-
potential
lows
defendants
to structure
Volkswagen
World-Wide
involved a
their conduct with
minimum
some
assur-
products liability suit in Oklahoma. The
as
ance
to where that conduct will and will
a
family bought
Robinson
new Audi auto-
not render them liable to suit.”
in
World-
They
mobile New York.
later moved to
297,
Arizona,
Volkswagen,
Wide
444 U.S. at
Arizona. On the way to
the Audi
Thus,
S.Ct. 559.
crashed in
Oklahoma
burst
into
flames,
[wjhen
severely
the
burning
mother and
a
corporation
“purposefully
They
products
two children.
a
filed
liabili-
avails itself of
of
privilege
the
conduct-
ty
State,”
suit
in an
ing
Oklahoma state court.
activities within the forum
Among the New
has
subject
defendants were
York
clear notice that it is
to suit
there,
dealership
Seaway,
car
regional
Audi’s
and can
act to alleviate
risk of
plaintiffs
distributor
for New York. The
litigation
procuring
burdensome
in-
that,
surance,
argued
because
inherent
passing
expected
mobil-
costs on
automobile,
customers, or,
of an
ity
it was “foreseeable”
if
risks are too
into
bringing
product
its connection with the
Oklahoma
severing
great,
product
not be construed as
“contact”
if the sale of
could
Hence
State.
defendant with the forum state.
or distributor such as
a manufacturer
Volkswagen, 444 U.S. at
Volkswagen
simply
an World-Wide
Audi or
Denckla,
occurrence,
v.
(quoting
but
745
Rudzewicz,
Corp. v.
Burger King
litigation
submit
burdens of
that forum as well.
Supreme
explained
Court
“legitimately may
a forum state
exer-
King,
475-76, 105
Burger
471 U.S. at
S.Ct.
personal jurisdiction over a
cise
nonresi-
(internal
omitted).
2174
citations
‘purposefully
who
directs’ its activi-
dent
Two years
Burger King,
after
the Unit
residents”
ties toward forum
because
Supreme
ed States
Court decided Asahi
giving
has a “manifest interest” in
state
Industry
Metal
Superior
Co. v.
Court of
“a
forum for
residents
convenient
redress-
102, 107
480
California,
U.S.
S.Ct.
ac-
injuries
by out-of-state
inflicted
(1987),
complicated
L.Ed.2d 92
which
Rudzewicz,
Corp. v.
Burger King
tors.”
specific
analysis. As-
462, 473,
471 U.S.
105 S.Ct.
motorcycle
ahi involved
fatal
accident.
(1985)
In-
(quoting
L.Ed.2d 528
McGee v.
The
filed
driver
suit in a
state
California
Co.,
ternational
Ins.
U.S.
court,
alleging
Life
that a defect
the motor
(1957)).
78 S.Ct.
has obligations” created be- part whether the mere on the awareness tween himself fo- foreign and residents of the of a the compo- defendant that rum, sold, he of manifestly manufactured, availed himself nents it and deliv- privilege conducting the business ered outside the United States would there, and are because his activities reach the forum State in the stream of by benefits protec- shielded “the commerce constitutes “minimum con- tions” of the presump- forum’s laws is tacts” between the defendant and the tively not require unreasonable to him forum State such that the exercise of
746 foreseeability” “an insuffi- “concept offend ‘traditional is “does not
jurisdiction
for
the Due
jus-
cient basis
under
play and substantial
notions of fair
”
Asahi,
109,
at
Process Clause.”
480 U.S.
tice.’
(citing
1026
World-Wide Volks-
S.Ct.
Asahi,
at
State,
possibility
a lawsuit
there
In
Nicastro,
October
Robert
surprise....
cannot come as a
A defen-
employee
Metal,
Scrap
of Curico
seriously
placed
who has
in the
goods
dant
stream injured his
operating
hand while
the metal
of commerce
economically
benefits
from shearing machine
his employer’s place
retail
product
sale of the final
of business.
a products
He filed
liability
State,
indirectly
forum
and
benefits
against
action
McIntyre UK and McIntyre
from the State’s
regulate
laws that
and
Jersey
America in the New
courts. The
activity.
facilitate commercial
trial court dismissed Mr. Nicastro’s lawsuit
against McIntyre
lack of
Asahi,
personal
UK
U.S
S.Ct. 1026
jurisdiction. The
(Brennan, J.,
Superior Court of New
concurring
part).
In Jus-
Jersey,
Division, reversed,
Appellate
Ni
view,
tice Brennan’s
a manufacturer’s
Am., Ltd.,
McIntyre
castro v.
Mach.
awareness that
would be sold
(N.J.Su
N.J.Super.
749
Mach.,
sovereign
Jersey.” McIntyre
card[ing]
concept
the central
of
J.
131
at
S.Ct.
“Indeed,”
noted,
of fair-
he
authority
discovery
in favor
considerations
“after
the trial
found
foreseeability.”
McIntyre
court
that the ‘defendant
ness and
J.
Mach.,
single
not
out does
have a
contact with New
pointed
131
at 2788. He
S.Ct.
Jersey
in question
of com-
short of
machine
Justice Brennan’s “stream
that
”
ending
foreseeability
up
this state.’
these
approach “made
While
facts
merce”
might
McIntyre
have revealed an intent to serve the
jurisdiction.”
touchstone of
J.
Mach.,
market,
Parting ways
they
at 2788.
not
131 S.Ct.
United
did
show
Brennan,
Kennedy
McIntyre
ex-
that
purposefully
with Justice
Justice
UK
availed it-
of the
Jersey
in the first
self
New
market.
J. McIn-
plained
“jurisdiction
that
is
Mach.,
authority
tyre
rather
up (Ginsburg, to four machines ended New up *23 750 J., Weintraub, Mach., (Ginsburg, 131 at 2801 J. S.Ct. (quoting Russell
dissenting) Jurisdiction We will return to J. Map dissenting).28 Personal A Out of L.Rev. 555 Machinery opinion shortly. U.C. Davis Labyrinth, McIntyre 28 (1995)). McIn- acknowledging that While survey foregoing United independent from fully
tyre America reveals a decisions UK, States Court’s Ginsburg observed McIntyre Justice key concepts and that pattern phrases injured that Mr. Nicastro the machine that marking guideposts the constitu randomly “not serve as Jersey in New had arrived personal juris specific tional boundaries of fortuitously, but a result of the U.S. “the constitutional system Although diction. connections and distribution arranged.” whether the defendant McIntyre deliberately J. touchstone remains UK (Gins- Mach., con McIntyre at 2797 ‘minimum purposefully established State,” J., King, dissenting). Burger in the forum burg, tacts’ 105 S.Ct. certain U.S. con- majority opinions, which Unlike the again. phrases appear again other and record to three essential densed the down contacts, ties, “meaningful include These facts, Ginsburg exhaustively docu- Justice relations,” by “actions the defendant McIntyre marketing mented UK’s efforts connec himself that create substantial States, toward as well as its the United notice,” tion,” “pur “clear warning,” “fair working relationship with its Ameri- close availment,” forum, poseful “targeting” the per- can distributor. She determined that random, fortuitous, or con “not attenuated Jersey’s ju- mitting New courts assert tacts,” activity of anoth not “unilateral was fair and McIntyre risdiction over UK or a party person,” “predictability er third reasonable, especially light New Jer- legal system potential allows sey’s largest as the market status primary defendants to structure their con in the scrap processing metal United they know liable to duct” to where will be Ginsburg States. asked rhetorical- Justice suit, “foreseeability,” meaning McIntyre could UK have ly, “[h]ow reasonably anticipate defendant “should intended, by targeting nation- its actions into being haled court” in the forum state. market, products in [New al to sell Jer- by “pur can Jurisdiction be established largest im- sey,] the fourth destination for posefully direct[ing]” at residents activities ports among all in the forum, “delivering] into products largest scrap States and the metal mar- expecta with the the stream commerce McIntyre Mach., ket?” 131 S.Ct. at J. they purchased by con J., tion that will be (Ginsburg, dissenting). Because state,” “purposefully sumers forum McIntyre had “purposefully UK availed state, deriving] benefit” from the na- forum itself’ of “the United States market tionwide,” “deliberately” “significant ac engaging it Ginsburg Justice concluded state, creating tivities” within the forum “thereby availed itself of the market of all products “continuing obligations” States in which its were sold residents state, invoking “benefits McIntyre its exclusive distributor.” J. the forum Ginsburg they distinguished products 28. Justice Asahi final destination of its once "Asahi, UK, noting McIntyre unlike did com- were delivered into the stream of ” Mach., not itself seek out in the United customers McIntyre J. 131 S.Ct. at merce.' UK, Unlike made States.” which J., (Ginsburg, dissenting) (quoting Uberti & A. large targeted industrial machines and Leonardo, Ariz. C. v. 892 P.2d market, component- American "Asahi was (1995)). part manufacturer with 'little control over the contacts, of the forum protections” quantity state’s laws. factors are “the Also, placing quality, clear that their nature perfectly and the source commerce, into the stream of and connection of the cause of action with *24 more,” “without is not an act those contacts.” The “purposefully two lesser factors state, forum and “aware- are “the directed” interest the forum State and up ness” of will is not Corp. where a end convenience.” Masada Inv. v. Al- len, guide- direction. All of these 697 purposeful S.W.2d at 334 (citing Shelby Mut. Moore, posts standing remain after the United Ins. Co. v. 645 S.W.2d 245 Court’s Supreme (Tenn.Ct.App.1981)). States J. Ma- chinery decision. Although some Tennessee courts contin framework,
ue use Masada’s five-factor this Court Appeals and several Court of C. panels began using soon jurisdiction Personal United States cases in Tennessee Supreme two-part Court’s test described generally closely have hewn Burger 462, 476-77, King, U.S. precedents. Court’s In (1985). Allen, See v. Corp. v. Gordon Green Masada Inv. Inc., Hosp., view process only permits due S.W.3d 646-47
observed that (Tenn.2009); Franklin jurisdiction Mortg. over American a non-resident v. Dream Mortg. Corp., House No. when the M2009- defendant 01956-COA-R9-CV, 2010 WL has minimum contacts with the forum (No 5, 2010) Oct. (Tenn.Ct.App. *3 Tenn. such that “the maintenance suit filed); R.App. P. 11 application Mullins v. does not offend ‘traditional notions of ” Harley-Davidson Yamaha Mem BMW fair play justice.’ substantial and How- (Tenn.Ct. Inc., phis, 924 S.W.2d ever, physical the absence of contacts Booksellers, App.1996); Kidd Davis Inc. v. personam will not jurisdiction defeat Ltd., Day-Impex, 832 S.W.2d where a purposefully commercial actor (Tenn.Ct.App.1992). Invoking the five- directs his activities toward citizens of part Masada is no longer necessary. test the forum State and litigation results injuries arising relating out of or of Appeals Tennessee’s Court first uti- case, those activities. such a “the lized the Burger King two-step personal defendant’s conduct and connection with jurisdiction test in Davis Kidd Booksellers: the forum are such he State should The minimum contacts test has two reasonably anticipate being haled into First, steps. requires court court there.” identify the contacts between the non- Second, resident and the forum. it re- Allen, Corp. Masada Inv. v. 697 S.W.2d quires the (Tenn.1985) (internal court determine whether 332, 334 citations omitted) exercising personal based on (finding proper over a these is contacts consistent with tradi- “purposely defendant who availed himself tional fair play notions of and substantial privilege doing business within justice. steps careful, call Both this state” he “purposefully when directed mechanical, analysis of the facts of his activities toward the citizens of this particular each case with focus negligent state and his resulted in actions defendant, forum, here”). and the nature of injury that, perform- We held litigation. ing this “minimum analysis, contacts” are primary secondary step there three and two analysis pri- first factors to primary marily consider. The three exercise. The fact-gathering subjective who in- ville contractor and subcontractor step involves some
second system. sprinkler Davis Kidd concerning stalled court judgment value Day-Impex, 832 S.W.2d at nature of the defendant’s Booksellers quality forum the fair contacts the law. The orderly administration Appeals Day- The Court of found informed should be judgment court’s “pur- Bulb had not Impex Sprinkler among matters: other considering, their activities toward posely directed” defendant, the interests on the burden and, therefore, no had contacts state, plaintiffs *25 interest of the forum in Davis Kidd Booksellers v. this State. relief, judicial system’s obtaining
in
at 575-76. Nei-
Day-Impex, 832 S.W.2d
obtaining the most efficient
interest
in
Sprinkler
nor
Bulb
Day-Impex
ther
had
controversies, and the
resolution of
glass
anyone
ever sold
bulbs
Tennes-
furthering
interest in
fun-
state’s shared
“advertised,
company
see. Neither
had
damental,
policies.
social
substantive
orders,
office
solicited
or maintained an
or
v.
Day-Impex,
Kidd
Davis
Booksellers
employees
No
employees in Tennessee.”
(citations omitted).
S.W.2d at 575
had
company
from either
traveled
Ten-
was
nessee to
business. There
no
Kidd,
solicit
In Davis
the trial court
ownership among
proof
common
opportunity
the case as an
parties viewed
distributors,
manufacturer
depart
“to
from the traditional ‘minimum
Day-Impex
there was
no evidence
analysis and
embrace some
contacts’
any
controlled
of Firemat-
Sprinkler Bulb
analy
version of
the ‘stream commerce’
or knew the
marketing
ic’s
activities
iden-
in Asahi.”
adopted
sis discussed but
tity
According-
of Firematic’s customers.
the invi
Appeals
The Court of
“deeline[d]
ly,
Appeals
the Court
held that
tation,”
“[i]n
because
United States Su
“[t]he
by
any
Day-
absence of
other conduct
agree on a
preme Court
itself cannot
Impex or
Bulb
toward
Sprinkler
directed
appeal
test”
stream of commerce
and the
Tennessee,
the nationwide distribution
could be
under
traditional min
decided
specific
a
agreement
is not evidence of
imum
framework. Davis Kidd
contacts
intent or
serve the Tennessee
purpose
Day-Impex,
Booksellers v.
832 S.W.2d at
Kidd
v. Day-
market.” Davis
Booksellers
Impex, 832
at 576.
S.W.2d
Appeals
The Court of
held in Davis
juris-
approved
This
personal
two-step
Kidd
Tennessee lacked
Court also
Burger
analysis
British
minimum contacts
King
diction over a
manufacturer of
its
v.
Inc.
sprinkler
Pennsylvania
Hospital,
bulbs and
dis- Gordon
We
Greenview
inventory
explained
plaintiff
prove
tributor.
that a
must first
A bookstore’s
a
badly
compo- by
preponderance
due to
a
the evidence that
damaged
defective
part
sprinkler system.
nent
in its
That
the defendant has minimum contacts such
bulb,
reasonably
component part,
glass
anticipate being
was manu-
“should
Daylmpex.
haled into
factured
Great Britain
court
Gordon v.
[in Tennessee].”
Inc.,
Day-Impex
sprinkler
Hosp.,
its
bulbs to
300 S.W.3d
sold
its Greenview
distributor,
Commc’ns,
v.
Pennsylvania
(quoting Lindsey
Trinity
exclusive
U.S.
(Tenn.2009)).
Inc.,
company
Sprinkler
Sprinkler
named
Bulb.
S.W.3d
plaintiff
also
question
“[i]f
Bulb sold the defective bulb in
to We
noted
can
distributor,
showing,
another
com- make that
the defendant will
Massachusetts
that the
pany
showing
Firematic. The bookstore
have the burden of
exer-
named
specific
would be
companies,
sued all
the Nash-
cise of
un-
plus
three
Inc.,
Hosp.,
Finally,
fair.”
v. Greenview
Gordon
HJC does not
participate
promotion,
any
(“HJC”), which sold the helmet to a Mas- The defendant Procraft, in Eubanks v. distributor, which sold sachusetts the hel- “liquid Inc. was Canadian siding” manu met to the Tennessee retailer. The Court Kryton International, facturer named of Appeals asserting juris- reasoned that products which to Kryton-Barbados sold proper diction over HJC was not because: Indies, prod which shipped West *26 places HJC ... maintains no offices or ucts to another company, Kryton Market Division, the United States. business HJC Tennessee. Eubanks v. Inc., motorcycle sells helmets directly Procraft, its No. E2003-02602-COA-R9- CV, 1732315, the aforementioned distributors. WL Each 2004 at *1 (Tenn.Ct.App. 2004) (Tenn. 3, any distributor is “free to Aug. perm. app. sell dealer denied 2004). 29, choosing anywhere of their in the United Nov. Appeals The Court of sell directly States.” HJC does not to found that these shipments were “not evi suggest dealers does not Kryton names dence” that International “intend any of dealers to its distributors. HJC ed to serve the Tennessee market.... motorcycle any does not sell helmets or [M]erely shipping a product to Tennessee directly other into the products State at the direction of Kryton-Barbados is not Tennessee. HJC no ‘transacting transacts business business’ within the state of state; Inc., within maintains no offices Tennessee.” v. Procraft, Eubanks 1732315, or agents and owns no 2004 *2 property (citing within WL v. Gibbons 922, chwartz-Nobel, the state. HJC did not create or control S 928 S.W.2d 925 system which brought (Tenn.Ct.App.1996)). distribution According any court, “[Asahi, Kidd, of its into the state. products HJC Eubanks Davis does participate not advertise or in the simply ] Mullins establish that placing advertising any products costs of of its manufactured item into the ‘stream of solicit does not business the state. commerce’ does not suffice to establish differently, Although jurisdic- consequences stated must caused defendant employed by tional test the United enough States with have substantial connection Appeals Court of for the Sixth Circuit is iden- the forum state to make the exercise [of] approach. tical in substance to our aAs jurisdiction over the defendant reasonable. observed, recently Nashville court federal Saxton, Energy Sys., Inc. Automation v. 618 three-part Sixth Circuit's Mohasco test "re- 807, (M.D.Tenn.2009) (quoting F.Supp.2d 812 existing mains an accurate statement of law” Mohasco, 374, Southern Mach. Co. v. 401 F.2d jurisdiction: in that Circuit, (6th Cir.1968)). 381 In the Sixth qua "purposeful First, availment factor” is the “sine purposefully the defendant must avail " personal jurisdiction. v. non of Dean Motel privilege acting himself in the L.P., (6th Operating F.3d causing consequence forum state Cir.1998). Inv., Second, Bailey LLC v. forum Accord Baxter state. the cause of action Inc., 11-3116, Poultry, WL must from the Harrison No. arise defendant’s activities (W.D.Tenn. 2012). Finally, Sept. there. acts of defendant at *6 within the forum conducting and “Asahi did activities jurisdiction,” personal State, invoking thus exception to the traditional benefits represent an analysis.” The fact laws.” protections ‘minimum contacts’ its “pre possessed International Kryton Eristoff, Attea v. No. M2005-02834-COA- knowledge products that the would sumed (Tenn. R3-CV, 2007 WL at *2-3 in Tennessee” was insufficient be sold 2007) (No R.App. May Tenn. Ct.App. jurisdiction. Eubanks establish filed) (internal application P. citations Inc., 1732315, at *3. Procraft, 2004 WL omitted). See also Franklin American Mortgage Mortgage v. Dream House a de Attea v. contains Eristoff M2009-01956-COA-R9-CV, No. Corp., of the law: tailed and accurate statement (Tenn.Ct.App. at *9 Oct. 2010 WL of the Four- The Due Process Clause 5, 2010) (No R.App. application P. Tenn. teenth Amendment to filed) out-of-state defen (“[Although [the lib- an individual’s protects Constitution charged knowledge can be dant] binding erty being free interest of com product would enter stream with which he or judgments of forum merce, activity nothing it did to direct its contacts, ties, or meaningful she has no Tennessee, [the toward nor did defendant in- process requires Due relations. avail corporation] purposely itself of given warning “fair that a dividuals be privilege of business in Tennes doing activity subject particular may them .... contacts with [The defendant’s] see foreign sovereign.” of a *27 are too to satis simply Tennessee tenuous spe- to assert When a state court seeks fy process requirements”). the due jurisdiction cific a non-resident de- over Tenn., Castings Inc. v. In Precision fendant who has not consented to suit of Mfg., H H found Appeals & our Court there, warning fair requirement that minimum contacts existed where a long the defendant has satisfied as corporation solic Pennsylvania defendant her “purposely his or activities directed” state, company ited a Tennessee manufacture at of the and the residents forum parts into a con litigation alleged some custom and entered injuries stems from governed by tract law. The out of or relate to” those Tennessee “arise fact that no one from the cor activities. out-of-state poration “physically visited” Tennessee the due process The touchstone of dispositive” was “not when the defendant analysis is whether the non-resident de- to “purposefully directed” activities purposefully fendant has established corporation ward a and a Tennessee “minimum contacts” in the forum state. injuries of contract arose breach suit Foreseeability causing injury related those activities. Precision Cast forum alone state is insufficient to satis- Tenn., H & ings Mfg., Inc. v. H No. fy requirements process. of due M2012-00334-COAR3-CV, WL Rather, question is whether “the Aug. at *3 (Tenn.Ct.App. defendant’s conduct and connection with (No 2012) Tenn. P. R.App. application State are such that he forum [or filed). reasonably anticipate being should she]
haled into court there.” survey leading spe- Our of Tennessee’s reveals
cific
cases
appellate
typically
essential in each case that there
[I]t is
Tennessee’s
courts
by
Inter-
apply
be “some act
which
defendant
the minimum contacts test of
Shoe,
purposefully avails
the privilege
by
itself of
national
as elaborated World-
Mullins,
Burger
Volkswagen
King,
576. In
of a
Wide
actions
distribu
tor
“free
any
that was
to sell
dealer ...
application
gener-
their
of this test is
anywhere in the
States”
United
did not
consistent with the “stream of com-
ally
confer
in Tennessee. Mullins
employed by
plus”
merce
doctrine
Justice
Harley-Davidson,
v.
...
est....”).
Shoe,
States,
also International
430
See
Marks v. United
grounds.’”
316,
(grounding
193,
758 Sieg v.
availment, preme precedent....”); N. simple.” Adam Court pure Co., F.Supp.2d Roebuck 855 Sears & Steinman, McIntyre, 18 Meaning (M.D.Pa.2012) (2012). (adhering to Third Cir L. Professor J. Int’l Sw. McIntyre in precedent light cuit J. described Justice Gins- Steinman also clearly one of majority’s adopt failure “to “entirely as consistent with burg’s opinion standards”); Original the two Asahi Cre a de- requirement” that Justice O’Connor’s Am., Inc., ations, Ready Inc. v. in- actions must demonstrate fendant’s (N.D.Ill.2011) (noting F.Supp.2d in the market the forum tent to serve McIntyre Machinery neither over that J. Steinman, 18 J. Int’l L. at 488. state. Sw. per Supreme precedent turned Court Ginsburg em- The facts which Justice nor disturbed Federal sonal dissenting opinion suggest her phasized subject); Lindsey precedent on the Circuit something-more O’Connor’s that “Justice Inc., USA, No. 4:09-CV- Cargotec McIntyre was “satisfied” J. standard” 00071-JHM, 4587583, at *7 2011 WL Ides, Loy. L.A. Machinery. L.Rev. 2011) Sept. (adhering to (W.D.Ky. Ginsburg explained, J. As Justice 385-86. precedent post-/. McIntyre preexisting up set its own exclusive McIntyre UK Machinery). According to one commen independent distributor assisted U.S. tator, opinion “has done Breyer’s Justice selling its machines distributor beyond back turning little the clock Jersey, larg- the state with America’s New precisely where it was after World-Wide est metal market. Justice Gins- scrap Volkswagen.'” Effron, 16 Lewis & Clark thus burg’s analysis purposeful established L.Rev. at 885. Another commentator McIntyre and articulated how availment Breyer’s noted “Justice concurrence more mere possessed something UK than ... no it favors gives hint as whether enter products awareness that would the Brennan or the O’Connor view of the Jersey. New It is not clear that Justice commerce, leaving stream of lower courts Breyer Ginsburg agree on the and Justice Borchers, Patrick marooned as before.” J. theory. stream commerce Nor is McIntyre Machinery, Goodyear, J. and the clear that either Justice endorses Justice Minimum Incoherence Contacts theory. Brennan’s Test, Creighton L.Rev. we not read Accordingly, do Justice (2011).
Breyer’s creating opinion hand, the other some On courts that favors Bren majority Justice majority commentators have read the nan’s of the stream-of-commerce version opinion Machinery as re- McIntyre J. Instead, test from Asahi. J. pudiating Justice Brennan’s broad stream- preserves merely Machinery doctrinal theory from One of-commerce Asahi. Few have quo. status courts felt com “McIntyre court federal has said pelled to alter their approach personal clearly rejects foreseeability stan- as the response to McIntyre J. jurisdiction,” and ob- dard See, Machinery. e.g., Cargo Ainsworth v. Kennedy’s served that Justice and Justice USA, Inc., tec *4 2011 WL opinions firmly “both embrace Breyer’s (“McIntyre precedential has little to no continuing significance of individual value.”); In re sovereignty specif- Chinese and ... hold that state Manufactured Drywall Litig., Prods. Liab. 894 ic jurisdiction must arise from a defen- *31 (E.D.La.2012) (“Justice 819, F.Supp.2d 848 the fo- dant’s deliberate connection with said, this,” Breyer’s a provides “Beyond concurrence clear di rum state.” the court quo.” affirms the apply existing “McIntyre merely rective to the Court to Su status 759 change McIn The court therefore construed J. the law. Like the court tyre Machinery “rejecting Kidd, as the foresee Davis we “decline the to invitation” ability of personal jurisdiction, standard adopt a approach personal ju broader to leaving legal landscape but otherwise risdiction. Davis Kidd v. Booksellers v. Spinner Windsor Indus. untouched.” Day-Impex, 832 S.W.2d 574. at (D.Md. Co., Ltd., 825 F.Supp.2d 638 2011). v. Teledyne See also Smith Cont’l VI. Inc., Motors, F.Supp.2d 840 931 Having fully analyzed legal the relevant (D.S.C.2012) “common (finding background, now we return to the of facts reasoning denominator” of J. the ease at bar. We will first reiterate McIntyre majority Machinery specific personal law of jurisdiction, “ plus’ enun ‘stream-of-commerce rubric” applies in Tennessee. following sum Asahi, by Justice ciated O’Connor mary Burger is derived 471 King, plus’ “the ‘stream-of-commerce test 471-78, 2174; 105 U.S. S.Ct. World- Court”); now commands a majority Volkswagen, 291-94, Wide 444 U.S. 100 Oticon, Hearing Sys., Inc. v. Sebotek 559; Shoe, S.Ct. International 326 U.S. at LLC, (D.N.J.2011) F.Supp.2d 865 516 316-19, 154; v. Gordon Greenview (“Neither knowledge expectation Inc., Hosp., 645-49; 300 S.W.3d at particular enough sales to a forum state is Commc’ns, Inc., Lindsey Trinity v. jurisdiction to establish to both according S.W.3d at 417-18. plurality opinion concurring opinion McIntyre ].”); Machinery J. [in long-arm de- Tennessee’s statutes are Northern Ins. Co. New York v. Con signed permit per- courts assert Bordeaux, 11- struction Navale No. sonal au- fullest extent 60462-CV, at *5 WL thorized the Due Process Clause (S.D.Fla. 2011) that, July after (finding Fourteenth Amendment the United “ McIntyre Machinery, ‘something J. process permits States Constitution. Due merely placing more’ than into a state to judgments against enforce its required stream of commerce is only defendant when the defendant jurisdiction”). Shortly after J. minimum sufficient contacts the state Machinery, federal court does not offend traditional Jersey New opinion found that had play justice. notions fair and substantial “overruled the line of cases exemplified Minimum contacts are when the present Inc., Prods., Tobin Astra Pharm. [v. purposeful defendant’s conduct and con- (6th Cir.1993)], F.2d 528 Barone Rich [v. nection with the forum are such state Co., Bros. Interstate Display Fireworks the defendant avails itself of the benefits Integ (8th Cir.1994)], F.3d 610 and Power protections of the state’s laws and rations[, Inc. v. BCD Semiconductor should, therefore, reasonably anticipate be- (D.Del.2008)],” Corp., 547 F.Supp.2d ing haled into that state’s courts. which held that “targeting the national imputes jurisdiction market” to all fo Assessing minimum contacts Oticon, rum states. Inc. Sebotek Hear two-part involves a is step test. The first LLC, ing Sys., F.Supp.2d at fact-gathering identifying exercise plaintiff Like of Dr. the relevant contacts. The re amorphous one Rorschach’s blots, ink Breyer’s opinion quired Justice is sus to establish that minimum contacts Thus, ceptible interpretations. by a multiple preponderance exist evidence. McIntyre Machinery signal J. fails quantity The court should consider *32 contacts, quality, cigarettes their nature and sales of United brand Tennes-
the of the cause of expresses and connection concern over Tennes- the source see A defendant’s But, those contacts. action with the see’s Escrow Fund Act. United meaningful when sufficiently us, contacts are has instructed that the defendant they demonstrate for awareness alone is insufficient estab- to Tennessee the ex- targeted purposefully McIntyre lishing minimum contacts. In J. reasonably should tent that the defendant Machinery, plurality concurring being haled into court here. anticipate opinions both cited Justice O’Connor’s dis- Asahi, cussion where she asserted that court finds sufficient mini If the “something necessary beyond more” is contacts, inquiry pro then the should mum that the stream of com- mere awareness two, step At step. ceed to the second “may sweep merce will into of showing bears the burden defendant Mach., forum See State.” J. that, of minimum despite existence at (plurality opinion); 131 S.Ct. 2789-90 contacts, exercising jurisdiction would J., (Breyer, concurring) 131 S.Ct. court, or unfair. The at this unreasonable 111-12, Asahi, (quoting 480 U.S. at consider such factors as the stage, should 1026). record shows also defendant, on the the interests of burden cigarettes Sumatra stopped shipping NV state, the interest plaintiffs the forum to FTS around the same time it sent this relief, obtaining judicial system’s inter letter. obtaining the most efficient resolu est in controversies, and the state’s inter tion of Because record does not reveal that furthering policies. est in substantive social any agent of NV Sumatra has ever entered apply minimum con- We will now Tennessee, the the State of State’s case is facts the case at hand.34 tacts test to the premised mainly sales of NV Suma- identify first is to NV Sumatra’s Our task cigarettes here. The tra’s State summa- We then contacts with Tennessee. must rizes these contacts as follows: contacts,
weigh the
of those
their
quantity
Sumatra,
through
NV
intermediaries
their
quality,
nature and
connection
designated by
import
Sumatra to
NV
ultimate purpose
the cause of action. The
States,
cigarettes
into
United
sold
to determine whether the contacts dem-
11.5
over
million
NV
has purposeful-
onstrate that
Sumatra
three-year period.
consumers over a
laws,
ly
availed itself
Tennessee’s
such
The volume of sales
establishes
clear
anticipate
reasonably
being
that it should
indication of
Sumatra’s
NV
deliberate
not,
here.
then
haled into court
If
exercis-
intent
sell in Tennessee and NV Su-
jurisdiction over NV Sumatra would
matra’s
such
knowledge of
sales.
unfair
automatically be deemed
under
Due Process Clause.
sales,
In addition
these
State
also
asks us
consider what
the State
establishes that NV Sumatra
de-
record
9, 2001,
latest,
scribes as “NV Sumatra’s contacts
by July
was aware
at the
First,
level.”
being
that its
sold in Ten-
national
Sumatra hired
cigarettes were
date,
bearing
nessee.
In a letter
NV counsel
States to assist the
applica-
company
filing
Sumatra’s executive director refers to the
three trademark
dissenting
differing interpreta-
primarily
34. We
that the Chief Justice’s
from our
note
result
analytical
opinion adopts the
frame-
same
in the record and
tion of several facts
assessing personal jurisdiction
work
as the
weight that should be accorded those facts.
majority
diverging
opinion. The
outcomes
*33
cigarettes.
tions for its United brand
Sec- mal regulatory and marketing measures
ond, the State asserts that NV Sumatra
are either less than or equal to what we
ingredients
filed its
list with the Office of have seen in other
cases where
Health and Human Services for the years was lacking, such as J. McIntyre Machin-
record, however,
2000 and 2001. The
indi-
ery, 131
2790-92, 2796,
(not-
S.Ct. at
FTS,
cates that
actually
it was
through its
ing that
the manufacturer aggressively
attorney,
ingredients
filed the
list in marketed its machines at U.S.
trade
Third,
2000.
NV Sumatra packaged its
shows) and Mullins v. Harley-Davidson,
cigarettes
Indonesian-made
with the label-
Sumatra’s “contacts at the national level.” the record does not reveal. The record Under existing United States reveal, does not example, for aggressive precedent, we cannot find that such advertising campaign aimed at the United completely contacts are irrelevant States. NV Sumatra itself sent no repre- minimum analysis. clear, contacts It is sentatives to trade shows in the United however, that such national contacts alone States. Nor is there even evidence of justify jurisdiction cannot in an individual Internet targeting sales United state.35 States markets. Even if we assume that agents nature, When we consider quantity, of NV Sumatra met with Mr. Battah in quality of NV Sumatra’s national con- twice, Florida once or that minimal physi- tacts, they up do not add to much. Filing cal contact with the United States is not a trademark application, submitting an in- type or quality of contact that would list, gredients and conforming the pack- suggest jurisdiction proper in Tennes- ages to federal standards are the minimal see. This is especially true when NV Su- things a cigarette manufacturer must do to matra steps took to stop the sale of its enable products its to be sold in the United cigarettes in the United shortly States.36 In terms of marketing, the rec- thereafter. Mr. Battah practically begged ord establishes that NV gave Sumatra Mr. NV Sumatra to assist him in targeting Battah some United brand posters to dis- Also, U.S. market play in for United cigarettes, stores. brand United brand cigarette packages but NV prominently displayed Sumatra declined his invitation. Blend,” the words “American NV Sumatra accompanied established only token con- by stripes and a flying eagle. mini- States, These tacts the United and the con- See, e.g., 35. Volkswagen, World-Wide 444 U.S. purposefully facturer availed itself of the New ("[W]e Jersey S.Ct. 559 have merely never ac- the national —market. —not cepted proposition that state lines are jurisdictional irrelevant purposes, nor It is not clear from this record whether NV we, could and remain princi- faithful to the Sumatra’s use of the term "American Blend” ples of interstate federalism embodied in the package or its design choice of was intended Constitution.”) Ginsburg, Even Justice dis- cigarettes to make appealing more senting in J. Machinery, went into foreign States market or in markets great explaining detail how the British manu- where American popular. are *34 twenty age cigarettes, each to Tennessee contains of these few contacts
nection
This
packages.
ten
means
extremely
carton contains
attenuated.
is
579,640
57,964
of
packages,
cartons
Accordingly,
the outcome of
in
cigarettes were sold
Ten-
United brand
hinges on the sales of
issue
jurisdictional
shipped
cigarettes
The
are
in
nessee.
cigarettes
in
million United brand
11.5
cases,
case
and each
contains
cartons.
count as contacts.
Tennessee.
Sales can
1,159 cases of
This suit therefore involves
However,
in this
are so
the sales
case
cigarettes being shipped
Tennessee.
meaning
they
not establish
attenuated
do
insignificant.38
is
quantities
None of these
the Indonesian manu
ful contacts between
and the State of Tennessee.37
facturer
dispositive.
quantity
But
alone is not
the nature
We must also consider
in
Quantity of sales is a relevant factor
their connection
quality of these sales and
analysis, and the
minimum contacts
our
case,
In this
the
to the cause of action.
nothing
of sales
to sneeze
quantity
here
the
sales to the
cigarette
connection of
con-
parties
The
have various views
at.
greater.
could
be
The
cause of action
cigarettes
cerning how these
should
cigarettes
alleges that
the
State’s lawsuit
Fund
Act taxes
measured.
Escrow
were sold in violation of the Tennessee
cigarette,
the
and the
manufacturers
11,592,800
Tobacco Manufacturers’ Escrow Fund Act
United
record indicates
Instead,
jurisdictional
of
prob-
in
1999.
cigarettes
sold
Tennessee.
brand
were
Consumers, however,
quality
lem here revolves around the
buy
cigarettes by
carton. Each
nature of these sales.
package
pack-
that,
signifi-
in an
identical
38.
It is also instructive to consider
37. We are aware
almost
lawsuit,
Supreme
cigarettes
Court of South Carolina
brand
cance of
sales United
specific personal ju-
held that it
wielded
Tennessee between 2000 and
in the
over
for
risdiction
NV Sumatra
its violations
cigarettes in the
context to the sales of
United
of South
Escrow Fund Act. The
Carolina's
during
period. According
States
the same
Carolina,
Supreme
adopting
South
Commission,
major
the Federal Trade
the six
Justice
version of
stream of
Brennan’s
cigarette
United States
manufacturers
sold
approach,
"[r]egardless
commerce
held that
cigarettes
United
1.2 trillion
in the
States
cigarettes
of how
olina,”
arrived
South Car-
FTC, Cigarette
during
period.
Re-
the same
existed
es-
minimum contacts
under
port
http://ftc.gov/os/
at
for
available
sentially the
facts that we confront to-
same
2002/05/2002cigrpt.pdf
(reporting domestic
Trading
day. State v. NV Sumatra Tobacco
2000);
cigarettes sales of 413.5 billion
Co.,
(2008).
379 S.C.
666 S.E.2d
FTC,
Report
Cigarette
for
available
that,
say
especially
it to
the wake of
Suffice
http://ftc.gov/os/2003/06/2001cigreport.pdf
McIntyre Machinety,
J.
we do not
consider
cigarettes
(reporting
sales of 398.2 billion
eschewing
proper to follow
Carolina in
South
FTC,
2001);
Cigarette Report for
avail-
approach
plus
that is
stream commerce
http://ftc.gov/reports/cigarette/041022
able at
currently the law
See
v. NV
of this state.
State
cigaretterpt.pdf (reporting
sales
376.4 bil-
Sumatra, 666
222 n.
our
S.E.2d at
5. It is
alone,
2002).
cigarettes in
lion
In 2002
these
view that the
Court’s
United
gave away
ciga-
manufacturers
11.1 billion
opinions
precedents, including all three
in J.
Cigarette
degree
rettes in the United States. See
Re-
McIntyre Machinety,
impor-
place a
Thus,
port
tance on "how
at 2.
the number of
[products]
arrived”
See,
Mach.,
e.g., McIntyre
cigarettes
major
state.
J.
131 S.Ct.
that the
domestic manufac-
J.,
2796-97,
(Ginsburg,
dissenting)
gave away
turers
in 2002 is one thousand
(emphasizing
cooperated
UK
how
greater
times
than the total amount United
with its
United States distributor to
exclusive
cigarettes
brand
that were sold
States,
target
specifically
Jer-
United
New
between 2000
largest
sey, the state
metal
scrap
with the
market).
the heightened
cigarettes
State insists that
it sold to
Mr.
Unico.
Battah
ciga-
liability
that attaches to
ordered the United
regulatory
brand
asserting
weighs
Silmar,
sales
in favor of
rette
Mr. Hawe
whom Mr. Battah
personal juris-
jurisdiction.
specific
Most
to be an employee
“assumed”
of NV Suma-
products liability
cases are
cases.
assumption
diction
tra. This
shown
to be
single
They typically involve
sale of a
shipped
incorrect. NV Sumatra
*35
product,
sprinkler
defective
such as a
Unico,
cigarettes, through
brand
to what-
helmet,
bulb,
a
motorcycle
a
metal shear-
requested.
ever destination Silmar
machine,
Here,
or a tire valve.
receipts,
record contains numerous
bills of
contrast,
To-
by virtue of
Tennessee
lading, and other documents that chart
Act,
Escrow
bacco Manufacturers’
Fund
how
ownership
and control over the
single
cigarette sold
every
United brand
cigarettes
brand
from
passed
United
com-
generated legal liability
in Tennessee
pany
company
way
to
on their
to Miami
argues
The State
that this
NV Sumatra.
(and
Tennessee).
there
from
approach
difference warrants a broader
Additionally, as the trial court noted in
However,
personal
specific
jurisdiction.
order,
August
its
the State did not
always
specific personal
jurisdiction has
(1)
dispute that
Sumatra
NV
“does not
defendant,
primarily
focused
on
any
own or have
in”
interest
Unico or
forum,
meaningful
and the
be-
connections
(2)
Silmar,
vice-versa;
NV Sumatra
them.
tween
We do not believe the exis-
any
does not have
relationship
contractual
regulatory regime
tence
like the MSA
“permitting
with Silmar
authorizing
requires us to alter the traditional consti-
cigarettes
sale of
brand
United
Tennes-
minimum
tutional
contacts calculus.
see;” (3) NV Sumatra
no ownership
The fundamental issue with the
sales
FTS,
vice-versa;
(4)
interest
and
cigarettes
brand
is
United
complete ownership”
“FTS had
that NV Sumatra
almost
do
nothing
had
cigarettes
purchased
United brand
from
with them. This
a classic
case of
cannot,
did,
Silmar. We
as Mr. Battah
company placing its items into the interna-
legally
conflate
managerially
three
in-
any-
stream
tional
of commerce without
dependent companies headquartered in
—
“more”
in-
thing
specific
demonstrate
three different countries—in order to ex-
in Tennessee. The
terest
record reveals
ert
over a manufacturer that
cigarettes
that the arrival of
Sumatra’s
NV
mostly
remained
aloof from the interna-
wholly
in Tennessee was almost
attribut-
marketing
tional
and distribution of its
able to the
of Mr.
initiative
Battah
cigarettes. Mr. Battah’s unsubstantiated
FTS,
company.
his tobacco distribution
conclusions,
legal
such as that NV Suma-
tra, Unico,
interchangeable,
and Silmar are
depositions,
In his
Battah
Mr.
insinuated
are not the sort of factual evidence that
cooperated
that FTS and NV Sumatra
di-
when
accept
ruling
courts must
as true
ciga-
rectly
bringing the United brand
lack of
motion
dismiss for
He suggested
rettes
United States.
jurisdiction.
compa-
distribution
intervening
Silmar,
nies,
unnecessary
were
Unico
in setting up
NV Sumatra had no hand
“smoke screens and mirrors” that
acted
Sumatra
no
FTS. NV
exercised
control
between
“filters”
NV Sumatra and FTS.
over FTS. NV Sumatra did not even seek
However,
documentary
cigarettes.
re-
distribute
evidence
out FTS to
When
pudiates
implication
cooper-
Sumatra Mr. Battah solicited NV Sumatra’s
market,
any
targeting
exerted
control over the destination
ation in
the Tennessee
Volkswagen, 444
aside his entreaties. Wide
U.S. at
brushed
NV Sumatra
Denckla,
Hanson v.
(quoting
its S.Ct. 559
NV Sumatra learned of
As soon as
1228).
present
le U.S.
in Tennessee —and the
sales
products’
precisely.
illustrates
this principle
case
of these sales—it severed
ramifications
gal
Sumatra became aware that it
Once NV
no
with FTS and sent FTS
its few ties
adopted
words,
could be sued in states
had
it was
more
other
cigarettes.
Fund
the Tobacco Manufacturers’ Escrow
activities, not NV
purposeful
Mr. Battah’s
Act,
company
products
withdrew its
Sumatra’s,
proximate
that were the
cause
from the
States market. NV Su
United
brand
of the sale of United
deliberately
matra
chose
to avail itself
language
To borrow
Tennessee.39
conducting
business in
privilege
the arrival of
brand
Burger King,
Tennessee.
*36
materially resulted
cigarettes in Tennessee
activity of another
from the “unilateral
case, therefore,
illustrates
This
World-
Mr.
party,” namely
Battah. NV Sumatra
Volkswagen’s foreseeability princi-
Wide
“deliberately” engage
“sig
not
in
did
ple.
no “ef-
itself
Because NV Sumatra made
nificant activities” within the State or cre
directly
indirectly”
or
fort” to “serve
obligations”
“continuing
ate
with Tennes
market,
had
company
Tennessee
no
Burger King, 471
at
see residents.
U.S.
prod-
“expectation”
effort-based
that
its
475-76,
One the mini marketing and “effort” in this case sales is foreign is compa mum contacts test that FTS, to Battah attributable Mr. they have where will nies should notice of ties company which had few to NV Suma- they to suit can susceptible so structure beyond purchasing re-selling tra its they might their to know where business cigarettes. United brand face As liability. the United States Su explained in preme World-Wide product Although liability this is not a when a Volkswagen, corporation “purpose case, relationship NV Sumatra’s to Ten- fully privilege avails itself of con compared nessee can be with that of the State,” ducting within the forum activities in defendant Kidd. The British man- Davis subject it has notice “clear that is to suit ufacturer in Kidd an Davis had exclusive there,” can act alleviate agreement the risk with national distribution litigation by, among things, company, Sprinkler other “sever American Bulb. The ing its Appeals agreement, connection with the State.” World- Court of held that this Supreme 39. As the United States Court noted 40. As the United States Court ex " plained Volkswagen, in "the fore King, World-Wide Burger ‘purpose- when defendants seeability analy process that critical to due fully their derive benefit’ from interstate activ- not the likelihood sis is mere ities,” companies unfair it is not for these way will find its into the forum State. Rather face consequences suit "in other States for it is that the defendant’s conduct and connec proximately such arise from activities.... with the State tion forum are such he said, proper,” Jurisdiction is the Court anticipate reasonably being haled should into proximately "where the contacts result "expectation” there.” relevant court actions the defendant that create a himself company’s product purchased in will be substantial connection with the forum State” forum state "arises from the efforts of the 473-75, Burger King, 471 at U.S. 105 S.Ct. directly manufacturer distributor to serve (first (in- added) emphases and second indirectly, product” the market omitted). quotation ternal citations marks and Volkswagenv. Wood that state. World-Wide Asahi, Accord 480 U.S. at S.Ct. 1026. 297-98, son, 444 U.S. at S.Ct. 559. other conduct the British manu- see. Beyond placing absent act of its United Tennessee, failed to cigarettes facturer directed at brand in the international Here, personal jurisdiction. commerce, NV establish stream of Sumatra’s NV tar- relationship had geted Sumatra no contractual behavior at the United States was any American distribution company. minimal most. specific It had no inter- independent foreign companies stand Two company’s est Tennessee. The aware- FTS, the the manufacturer and between after largely the fact—that its ciga- ness— Even so national U.S. distributor. more being rettes were sold in Tennessee fails Kidd, we can no than Davis discern purposeful evidence availment of the intent or specific purpose “evidence Tennessee market. Based the attenu- market.” serve Davis Kidd ated quality nature and sales of NV Day-Impex, Booksellers v. S.W.2d Tennessee, Sumatra’s we do not find that these sales amounted to mini- mum contacts sufficient for NV Sumatra to contacts, In terms of relevant reasonably expect being into court in haled Sumatra similarly NV is situated Tennessee. The International Shoe does motorcycle Korean South helmet manufac- fit; NV Sumatra wear cannot it. We company, turer Mullins. Like that *37 have no proceed therefore need to to the Sumatra no offices or of places “maintains of step second the minimum contacts anal- in business the States.” It its United sells ysis. distributors, products independent to
which are sell any “free to to dealer of cases, personal jurisdiction In the law in choosing anywhere their the United requires us follow the United States States.” NV Sumatra “transacts no busi- Supreme Court’s lead. The Court de- in ness” Tennessee has no agents substantively clined to alter the traditional property owns no within the Like State. minimum contacts inquiry in Asahi and J. South the Korean manufacturer in Mullins McIntyre Machinery. certainly will We UK, and unlike NV Sumatra Jersey not do so here. If New lacked not “did create or control the distribution jurisdiction over McIntyre Machinery, J. system” brought products that its the into vigorously directly targeted which advertise, does State. NV Sumatra markets, including Jersey, American New business, personally promote solicit its surely jurisdiction then Tennessee lacks products here. Mr. Battah his Until sent over NV Sumatra. Sumatra, unsolicited reports sales NV appears company the “was never VII. [cigarettes]
aware to whom ulti- its were mately they sold or in to whom were sent” personal The lack courts Harley- the United Mullins v. States. jurisdiction over because NV Sumatra the Davidson, then, at 924 S.W.2d 909. Even establish, State of Tennessee has failed to “liquid the siding” like Canadian manufac- evidence, preponderance a Inc., Procraft, turer Eubanks v. purposely NV Sumatra availed itself of the *2-3, “pre- WL NV Sumatra’s privilege doing business Tennessee. products sumed knowledge” were Accordingly, judgment the Court of jurisdic- sold Tennessee not confer does trial Appeals is reversed and the court’s tion. complaint for lack dismissal of State’s jurisdiction
This record reveals that Sumatra under Tenn. R. NV 12.02(2) no P. meaningful had contacts with Tennes- Civ. is affirmed. costs of statutory requirements by to the State of Ten- form are taxed appeal the escrow fund. making payment a into nessee. dismiss, filed a motion to NV Sumatra WADE, dissenting filed a R. C.J. GARY personal jurisdiction, lack of which alleging LEE, J., G. in which SHARON opinion, discovery the trial court denied. After joined. parties, filed a between Sumatra summary per- judgment on motion C.J., WADE, dissenting. R. GARY issue, the trial sonal which Introduction that our granted, holding court courts 1998, a number of November foreign over could not exercise a manufacturers and American tobacco manufacturers with limited contacts such and territories of the majority of states Tennessee. trial court dismissed Tennessee, States, including without complaint addressing motion litigation to- over reached settlement summary judgment filed for State had costs. The terms bacco-related healthcare Sumatra, that NV as a non- its claim the tobacco manu- permit of the settlement manufacturer, participating owes State litiga- involved facturers were payments under the Escrow Fund Act. liability portion of their tion withhold not, course, The trial court did conduct upon terms based under settlement a trial on the merits or reserve in a participating loss of market share proof final conclusion of assessment state, a “qualifying enacts unless the state whether the State had established party manufacturers not requiring statute” personal jurisdiction by a preponderance litigation participate to either review, On the evidence. first-tier desig- an amount into a pay settlement *38 trial Appeals Court of reversed the court’s upon ciga- annual nated escrow fund based personal jurisdiction as to ruling and underlying purpose rette sales. The of granted summary the State’s motion for requiring manufacturers nonparticipating judgment the as to merits of the case. join pay to either in the settlement or into “a play- the escrow fund is to assure level Court, Now before this NV Sumatra selling cig- field” for all manufacturers to assert continues that Tennessee courts arettes in the states and ter- participating may specific jurisdic- personal not exercise consequence, ritories. Tennessee disagree tion I over it. and would affirm statute, adopted qualifying the Tennes- Appeals the of judgment see Tobacco Manufacturers’ Escrow Fund the issue. I Although believe (“Escrow Act”), Act of 1999 Fund Tenn. the majority opinion by general- this Court (2001 §§ Ann. to Code 47-31-101 -103 & ly sets out the standard for appropriate Supp.2012), requires “[a]ny which tobacco correctly personal jurisdiction and finds selling cigarettes to manufacturer a motion dismiss under Tennessee consumers within the state of Tennessee” 12.02(2) Rule of Civil Procedure —rather 26, 1999, May after to either become than for summary judgment a motion —is party existing agreement settlement the appropriate disposition vehicle for the specified payments “quali- or make into a issue, I must dissent 47-31-103(a). § fied escrow Id. fund.” because, my opinion, in the statements instance, depositions In this State of contained in the affidavits and (the “State”) respective force filed motions support filed suit to NV Suma- (“NV Company summary judgment tra Tobacco Su- warrant a different Trading matra”), manufacturer, con- foreign result. 12.02(2) fair, that,
On a Rule motion to I dismiss believe based upon sworn ab personal jurisdiction, based on lack of record, appearing statements affidavits, sent testi depositions, “live” State made a showing justifies has mony, trial must draw all reason courts personal jurisdiction. plaintiff
able
in favor of the
inferences
otherwise
as true the
accept
allegations
Evidentiary
I.
Standards for
complaint.
I
supporting the
believe
12.02(2)
a Rule
Motion
clearly
prima
the State
made a
facie
As
the majority
stated
and in this
showing that the contacts of NV Sumatra
dissent, the trial court should have treated
Tennessee, directly
through
its dis
summary
NV Sumatra’s motion for
judg-
tributors,
per
are sufficient
establish
upon
ment
juris-
based
a lack of personal
view,
Moreover,
jurisdiction.
sonal
in my
diction
a supplemental
motion
dis-
deposi
the contents of the affidavits and
12.02(2).
miss. See Tenn. R. Civ. P.
This
tions that
in the trial
were filed
court
however,
consequence,
of no real
be-
only establish that NV Sumatra’s contacts
cause
both
State and NV Sumatra
markedly
with Tennessee
exceed those
rely upon
chose to
beyond
plead-
facts
McIntyre Machinery,
defendant in J.
—
Nicastro,
ings
support
their
U.S. -,
arguments. The
Ltd. v.
(2011),
12.02(2)
adjudicating
upon
complaint
the affidavits filed
er the pleadings and
in a light
affidavits
motion,
support
or in
the alterna-
most
plaintiff
.... To
favorable
tive,
upon deposition testimony
based
motion,
defeat
plaintiff]
such
[the
need
evidentiary
even
hearing.
an
Id. at 644.
only
prima
make a
showing
facie
note, however,
It
important
is
jurisdiction.
the manner in
the trial
which
court choos
Furthermore, a
disposing
“court
aof
proceed
es to
affect the
will
standard of
12(b)(2)
weigh
motion does not
the con-
review
for the motion
dismiss.
If the
troverting assertions
party
seek-
trial court determines that it
appropri
is
dismissal,
”...
we
because want “to
ate to decide the motion
evi-
without an
prevent non-resident defendants from
“[djismissal
dentiary
then
hearing,
regularly avoiding
jurisdiction
personal
only
specific
alleged
if all
proper
facts
by
simply
filing an
denying all
affidavit
plaintiff collectively
fail to establish
”
jurisdictional
Dismissal
facts.
prima
personal
facie
for
jurisdic
case
procedural posture is proper only
all
if
tion.” Id. If
trial court
conducts
specific
plaintiff
which
...
facts
evidentiary hearing,
may
then it
assess
alleges collectively
prima
to state a
fail
the credibility
any
testify
witnesses that
jurisdiction.
case
facie
for
plaintiff
determine if the
has estab
Patterson,
CompuServe, Inc. v.
89 F.3d
personal
lished
pre
under a
(6th
Cir.1996) (citations
omit
Id.;
ponderance of the evidence standard.
ted)
added)
(emphasis
Theunis
(quoting
Chenault,
see also
view the solely Rule motion A. Minimum Contacts to and other written evidence. affidavits al., 5B Charles A. et Wright step analy- Federal Prac- The first in the due process (3d ed.2005) § tice and 1351 Procedure sis is to determine whether defendant 770 (2012) (“[C]ourts 417, L.Rev. 441 should contacts with sufficient
has established
they
[McIntyre
requiring
read
majority
]
summarizes
Tennessee. The
like
jurisdictional
in the
States Su-
rules
opinions
apply stringent
United
varying
plurality
most
personal
applied by
[McIn
two
recent
those
Court’s
preme
products
in a
involving
result
jurisdiction
tyre
application
decisions
Such
would
].
by
of commerce
the stream
farce of due
placed
process.”).
into
first, Asahi Metal
foreign manufacturer:
observes,
Brey-
“Justice
majority
As
Industry
Superior
v.
Co.
Califor-
mul-
susceptible
...
is
to
er’s concurrence
1026,
102,
nia,
107
94
480
S.Ct.
U.S.
Clearly, Justice
tiple interpretations.”
(1987),
split
92
in which the Court
L.Ed.2d
Breyer
McIntyre
was
on
content
decide
O’Connor’s “stream-
4-4 between Justice
participat-
facts
had no interest in
its
position and Justice
of-commerce-plus”
a new
any attempt
establish
less-demanding “stream-of-com-
Brennan’s
that set out
jurisdictional standard-either
and, second, McIntyre,
merce” approach,
by
Kennedy
plurality opinion
in the
Justice
the Asahi
which
intended
resolve
by
Jersey
Su-
adopted
New
produce
also
but which
failed
impasse
Court,
McIntyre
preme
see Nicastro v.
at least five votes.
opinion garnering
an
Am., Ltd.,
201 N.J.
related market- Corp., Willemsen Invacare Or. ing, anything may support else” find- (2012).5 being of sufficient contacts. While the ma- 282 P.3d After majority impact cigarettes 4. opin- seeks minimize the in the United States highly significant by citing to try of this fact ex- effect ion to understate the of the raw data, ternal Federal Trade Commission which cigarettes number of Tennessee, that NV Sumatra sold ciga- show that number of NV Sumatra weighs against a fact that the ma- rettes sold in Tennessee from 2000 to 2002 jority's ultimate conclusion. Whatever quite total amount small relative to the purpose, majority I that the would observe sold, given away, or even gone outside the record otherwise cigarette major United States domestic facts of this failed consider the case under during period. time manufacturers the same proper review. standard of information, This external to the record in case, Specifically, during period relevant is irrelevant to the central issue of corporation from 2006 to the Ohio sold personal jurisdiction exercise whether the Oregon, 1166 motorized wheelchairs near- comports process. due over NV Sumatra ly ninety-five percent which only majority came with I can assume that the searched battery chargers figures the Taiwa- and included for the total sales manufactured
773 from, claim, liability the Tai case products sued on a that the ... the “remove[d] scope the challenged McIntyre’s applicability” manufacturer exer because wanese jurisdiction, out-of-state defendant had personal pointing cise of out sold to corporation that forklifts customers in the forum state that was Ohio had decade, previous over the Oregon generating in over products chosen to sell sales). “that, ], million in arguing [McIntyre $5.3 under the mere fact that Taiwanese [the manufacturer] agree I with the interpretation of Justice may expected battery charg have that its Breyer’s concurring opinion set by forth might up Oregon in not suffi ers end Oregon view, my Court. Oregon juris to eourts give specific cient Breyer’s opinion Justice find- authorizes a it.” at 872. Relying diction over Id. on ing of minimum contacts if there is either a “ Breyer’s Justice concurrence as con ‘regular ... or ‘regular flow’ course’ however, in trolling opinion McIntyre, in sales” a forum state “‘something or 1,100 sale of court found “the over [of more,’ such special design, state-related battery manufacturer’s] the Taiwanese advice, advertising, marketing, or anything chargers two-year over Oregon within McIntyre, (Brey- else.” S.Ct. ... period ‘regular ‘regu shows flow1 er, J., concurring). The sale of over 11.5 Oregon. lar course’ of sales” in Id. at 874 products roughly million over the course of (second original) in (quoting alteration clearly “regular three years constitutes a J., McIntyre, (Breyer, at 2792 S.Ct. “regular flow” or course” of sales for that (internal concurring)) quotation marks period. regular This course sales omitted). This volume of sales “was suffi is reason alone to hold ‘regular cient to show a course of sales’ prima State has made out facie case and thus establish minimum the exercise of over sufficient Oregon for an court to Furthermore, contacts exercise NV Sumatra. the State car- specific jurisdiction foreign over” the de ried its burden even a preponder- under added). (emphasis fendant. Id. at 875 ance of evidence standard because the more,” similarly distinguished Other courts have “something by as stated Justice McIntyre foreign and held that a defen Breyer prov- as an alternative method of subject personal jurisdiction dant is to in ing personal jurisdiction, has also been upon the forum state based the volume of established the sworn statements in the See, record, e.g., parties state. which to consti- sales Graham v. deemed Hamilton, 3:11-609, necessary proof No. tute all on the sub- 2012 WL (W.D.La. 15, 2012) ject. at *4 Mar. (holding that McIntyre gov “the concurrence does not Relationship with Distributors because,
ern facts this case” unlike single Jersey McIntyre, McIntyre, The second pertinent sale New fact foreign Breyer’s forth record showed that the defen as set in Justice concur 800,000 rence, “places McIntyre “permitted, over vehicles into is that dant UK wanted,” sell year,” many McIntyre market each of which indeed America “to U.S. state); likely anyone willing in” the in America “would sold forum its machines USA, Inc., v. Cargotec McIntyre, Ainsworth No. them.” at 2791 buy 2:10-CV236-KS-MTP, J., (Breyer, concurring). Ginsburg Justice WL (S.D.Miss. 2011) *7 relationship describes the between McIn- Sept. (holding corporation. corpora- chargers corporation provided
nese Ohio The Taiwanese $30,929 approximately Oregon purchasers. tion received for the Id. at 870-71. 2000. The transaction was initiated McIntyre America further tyre UK Free; dissenting opinion. Duty subsequently, her While Pacific Coast detail Battah, exclusive dis was the according representative America “the *45 McIntyre States for in the United tributor us the importer NV Sumatra asked to be two during period, relevant “the UK of the product.” After FTS sold all independent and separate were companies it initially purchased, had cigarettes it commonality ownership of with ‘no entities place orders began “wanted more” and ” management.’ McIntyre, for and by telephone facsimile United J., dissenting) (quoting (Ginsburg, cigarettes separate to three entities brand Am., Ltd., 399 Mach. Nicastro Sumatra; NV Unico simultaneously: (N.J.Sup. 945 A.2d N.J.Super. in Trading, Singapore; a distributor based id. see also Ct.App.Div.2008)); Hawe, out of and Nabil an individual based (“[A]n opinion) independent com (plurality primary point became a London who McIntyre’s sell J. machines pany agreed to that, at contact for FTS. Battah testified no in ... and there is the United States initially, he had assumed that Hawe least that was under J. allegation the distributor Sumatra, when, fact, in worked NV control.”). Thus, McIntyre McIntyre’s entity, Hawe for a third Silmar worked direct, clearly yet indepen and UK had was in British Trading, which based dent, relationship with an American dis Battah testified he Virgin Islands. that designed and to market sell tributor often a direct call to Su- place would NV products throughout the United States. up in matra Indonesia follow on orders. significant undisputed While it originated in but shipments The Indonesia Sumatra’s United brand number NV London, usually through Singapore, came in cigarettes were sold States— United both, en in route FTS Miami. this Tennessee —from 2000 origin lading certificates of and bills of particular foreign manufacturer’s relation that, record indicate whatever distributor, with its American FTS ship along way, stops the United brand clear, (“FTS”), is but still Distributors less cigarettes left NV Sumatra Indonesia personal jurisdiction. sufficient to establish identifying their final destination as the of informa- primary The State’s source Miami). (specifically, United States the sale NV Sumatra’s regarding tion Despite Trad- the involvement Unico cigarettes brand in Tennessee and United inter- Trading possible Silmar a number of other states is sworn mediaries, testimony Battah’s indicates testimony of Basil deposition affidavit had relationship that he a direct with NV Battah, FTS president FTS. was an had Sumatra. When asked whether FTS cigarettes importer and distributor a written or oral “enter[ed] into contract out of Miami Free Zone—the based anyone NV with from Sumatra about dis- Miami, trade Florida —and foreign zone cigarettes,” an- tributing their Battah only was the distributor of United brand definitively: swered had an oral cigarettes in “We during the United States I agreement that was their exclusive dis- period. Battah that the relevant testified writing it cigarettes put tributor. We wanted to first United brand that FTS bought company got they just were from a California but we never that far because Duty stopped selling completely.”6 called Pacific Free late 1999 us Coast grounds allegations majority accredit Battah’s matra on the that these declines to agreement allegations "legal that the State as to his NV Su- constitute conclusions” those very asked with whom he had dis- this document “made When clear” cussions, responded: “With ... Battah that NV Sumatra did not want have an A NV Sumatra. con- people several agreement directly with FTS. Never going got tract was to written. 25, 2001, On July two weeks after exe- They far. me their word that I gave document, cuting this Sumatra sent NV only their exclusive and distributor for
was containing following facsimile7 state- America.” Battah fur- ment: relationship testified real “[t]he ther between Sumatra. myself *46 Your report cigarettes the United I They cigarettes], made sold [the you us ago faxed to some time stated Everybody them.... else in between that cigarettes the said be pur- could mirrors smoke screens and and
w[ere] California, Washington, chased in Tex- unnecessary.” were as, Arizona, Louisiana, Mississippi, 9, 2001, July A document dated executed Carolina, Georgia, South and North Bingei, Timin Executive Director of Oklahoma, New Hampshire, Tennessee Sumatra, that, at least as NV indicates of Kentucky. and Most States men- of date, that NV Sumatra did not have a subject tioned are to Escrow Fund Act. regard with relationship direct FTS with cigarettes. to the United The docu- brand We are wondering importer whether the provides had “ap- ment that NV Sumatra any or has party opened an escrow ac- Trading ... pointed [its] Unico as sole Attorney count with the States General. cigarettes agent marketing sale and We notice receive[d] Office of ” bearing the name ‘United.’ It also states n Attorney General in the States NV Sumatra that consented “to allow Uni- Tennessee, subject to escrow such as appoint ... to ... to be Trading co Silmar California, Hampshire, Pennsylva- New exclusive-buyer its to distribute ‘United’ nia, request etc. to confirmation whether in cigarettes for sale the United States of cigarettes our were their sold in Battah, working who had America.” been opened and whether we have an account directly Trading with Hawe Silmar related to the escrow fund. market and build United brand States, throughout the United conceded "documentary regarding has not with Battah the sale United brand corroborated other reliable evidence.” While this maneu- cigarettes in the United Because Bat- States. majority allows the aside
ver brush facts testimony nothing tah's do with conclusion, support that do not its its stated legal any agreement validity between him ignoring allegations grounds for Battah’s are Sumatra, disregard- and NV it should not Initially, testimony unsound. individual’s Webb, "legal ed as a conclusion.” See agreement he had an with other some (discussing "analytical S.W.3d at 434 dis- entity legal individual not a conclusion legal tinction factual and between assertions ignored entirety. that can be Of its conclusions”). Moreover, contrary to the course, if an he individual states that and majority's requirement analysis, there is no party agreement another have verbal that is testimony that the State corroborate Battah’s law, legally under enforceable "documentary with or other reliable evi- declining would to ac- court be correct dence.” testimony credit the to the that it at- extent tempts validity legal to establish of an The unclear the fac- record is as to whom case oral contract. But is not the here. instance, simile is handwrit- was sent. addressee the State has offered Bat- Basil,” ten as "Mr. but the document refers to testimony proof representatives tah’s person. directly NV Sumatra communicated with FTS the third are cigarettes imported rettes to alleviate concerns United United Since [Miami, Florida,] The first such distributed States Customs Service.8 an[d] to the subject requirements place which is took November of 2001 in meeting Fund, indirectly but dis- Escrow China, initiated Beijing, was require which an Es- to states tributed Battah, Sumatra. attendees included Fund, request check FTS to please crow Hawe, Bingei, NV Sumatra’s Execu- Barry lawyer, Boren on how their Beijing meeting, tive Director. At the said notice. to the respon[d] marking parties discussed is- added.) This, course, sug- sue, join (Emphasis whether NV Sumatra should was well aware that NV Sumatra gests states, with the November settlement July prior time” “some ciga- forecasts for brand sales United importing distributing FTS regard States. With rettes United throughout brand United latter, “presented FTS all States, including Tennessee. sale, went, every which facets of where *47 with This information is consistent escrow to target states we needed and continue from Ten- fund notices in the record the Bingei our business.” Battah showed Attorney General’s Office to NV nessee the present meeting others the charts Indonesia, in which are dated Sumatra number indicating cigarettes the of 7, 2001. May 21 and The notices March state, in being including were sold each liability potential the of tobacco describe pre- Battah that he Tennessee. testified under manufacturers the Escrow products figures additional sales at a sented subse- NV request Act Sumatra to Fund quent meeting with Hawe and officials completed Compli- a of return “Certificate from Trading, Sumatra and NV Unico deposit if ance with Act” and funds place which took in in 2002.9 Miami Ulti- necessary. mately, Sumatra Battah NV notified via had Battah testified that he numerous telephone February in of 2002 that it with Su- meetings representatives of NV longer pursue would no sales in the United matra, Trading, from Silmar with Hawe The relationship States market. terminat- representatives Trading. of Unico remaining ed Battah sold when his inven- meetings purposes of these were to tory brand cigarettes. of United ar- formalize American distribution upon Based the contents of the record brand rangement cigarettes for United evidencing relationship between and to obtain Sumatra NV assurances NV distributors, its change packaging ciga- including of its Sumatra and would Service Apparently, the Customs had issued tives from NV Sumatra had ever come to "marking May to FTS in of my notice" responded, Miami and he "Not to knowl- upon packag- its based determination edge.” An affidavit an NV from Sumatra cigarettes confusing would representative May in more than consumers, conspicuously as did not it state eight years meeting allegedly after the took it Indonesia that was made in and could be place, "corporate stated that NV Sumatra's having interpreted as the been "Made any trip do not reflect to the records United in the U.S.A.” Sumatra a waiver NV secured by anyone during from Sumatra] States [NV already cigarettes posses- for all of the in period through the time 2004.” Bat- sion of FTS that time. Boren, attorney, Barry averred that tah’s occurred, meeting may have "[s]uch but meeting 9. Battah’s this recollection of contra- years passage many of so I after the cannot deposition testimony, own dicts his earlier in say place.” did or take whether it did not any representa- which he was whether asked FTS, Sumatra majority describes NV sales millions subject and the other states bystander: escrow as an innocent fund. meeting NV Sumatra called Battah solicited Suma- When Mr. NV Beijing in gather November of cooperation targeting the Ten- tra’s information about the volume of sales that market, brushed NV Sumatra nessee being made on were its behalf the Unit- as his entreaties. As soon NV aside FTS, States regulato- ed as well products’ learned of its sales in Sumatra implicátions of ry continuing to cultivate ramifications legal Tennessee —and the Finally, February that market. few of these sales—it severed ties its. nearly year one after having first been ciga- FTS no with FTS and sent more potential liability notified of its under rettes. Escrow Act Fund and seven months after confirming potential liability via a fac- Sumatra aware that it Once NV became distributors, simile its de- Sumatra adopted sued in could be states had pull cided to out of United States Escrow the Tobacco Manufacturers’ course, entirely. market Of kept Act, company Fund withdrew profits it from targeting had accumulated market. products American consumers and did so -without deliberately NV Sumatra chose not to paying cent into the escrow funds privilege conducting avail itself Tennessee and the participating other business Tennessee. *48 states, thereby “unleveling” the playing infer- entirely This is not unreasonable cigarette field among manufacturers. ence the in record. allegations the states, sued the When NV Sumatra However, in light when viewed the most layers the of used its distribution chain to State, to allega- favorable the those same itself from distance FTS and claimed subject alter- plausible tions are to a more had of purposefully it never availed itself is, interpretation. That Suma- native NV the United States market.
tra obvious in engaging had an interest My primary purpose in this developing a United States market because California is, part, alternative narrative in to demon distributor, Free, Duty Pacific al- Coast fallibility attempting strate the of to assess ready large inventory a of United had its credibility upon allegations witness based brand on hand. Pacific cigarettes When affidavit, complaint, in a of an contents Duty Free not or not Coast could would in transcript of a deposi words sought sell out cigarettes, NV Sumatra’s Sampson tion. See Health Wellmont distributor, FTS, purchase another to (Tenn.Ct.App. Sys., 228 S.W.3d inventory. NV Sumatra made informal 2007) (concluding proceeding that when a Battah, proceeded who un- assurances “strictly papers,”’ such as a is ‘on assumption dealing der the that he was on and deposition matter decided affidavits directly of the with manufacturer Unit- transcripts, “testimony cannot be disre cigarettes. ed This benefi- mutually brand credibility” basis of a lack of garded relationship cial until Suma- Hall, flourished NV (citing Byrd v. 847 S.W.2d (Tenn.1993))). tra escrow fund from the stage received notices pro At this of the Attorney General’s Office ceedings, duty court trial was May March In July light and of 2001. in the construe the sworn statements clarify the weigh NV Sumatra made efforts to without most favorable State steps in supply credibility chain and seek counsel of the affiants or view, reliability my regarding legal ramifications its of their assertions. and, as case that market a result prima made a facie United States State products up its end targeting, of the sales NV aware Sumatra there. subject liability and it to forum state Tennessee and United brand Kennedy’s plurality opinion Justice purpose States and the United throughout view that the tar- McIntyre supports the markets fully those availed itself give a national market can never geting of independent distributors. It is through its jurisdiction in particular rise to personal opinion also that other activities NV my state, foreign that the defen- proposes my and its buttress Sumatra distributors signifi- dant must also have purposeful that, upon this limited conclusion based with the forum state itself. cant contacts record, even be able to the State would McIntyre, (plurality See at 2790 jurisdiction by prepon prove personal (“These may reveal an intent opinion) facts standard. derance of the evidence market, they the U.S. but do serve McIntyre availed purposefully show that J. Market with the National Contacts market.”). Jersey Jus- itself of the New pertinent fact men- third final dissent, emphatically as- Ginsburg, tice represen- Breyer tioned Justice foreign target- serted that a manufacturer McIntyre UK had attended tatives of ing the entire United States market should trade various locations shows jurisdiction any- subject States, Las including Chicago, Ve- Id. at products injury. where its cause Orlando, gas, Orleans, Diego, San New J., dissenting) (“McIntyre (Ginsburg, McIntyre, 131 S.Ct. San Francisco. UK, by engaging America J., (Breyer, concurring). These promote and sell its machines in the Unit- representative actions were of the British States, ‘purposefully ed availed itself target efforts to the United manufacturer’s nationwide, not a the United States market majority market as a whole. The single market in a discrete State these actions those of contrasts *49 there- collection of States. UK there is a Sumatra and concludes of by availed itself market of all States the major- national contacts.” The “paucity of products by in its which. its were sold ity impor- to most appears believe the distributor.”). By re- explicitly exclusive tant are those that “the record does facts jecting plurality’s “seemingly the strict no- reveal,” including NV Sumatra’s fail- J., rule,” (Breyer, id. at aggressive advertising ure “an to create concurring), Breyer’s Justice concurrence States,” aimed at the United to campaign equivocal is more but leaves for another send to shows in “representatives trade day question the answer to the of whether States,” the United to in “Inter- engage marketing targeting and sales activities net sales mar- targeting United States subject a may the United States as a whole kets.” This fails to take into assessment foreign personal jurisdiction in a entity to account numerous activities which particular state. directly NV clearly engaged, Sumatra both us, In indi- the case before record distributors, and through its that did tar- marketing cates FTS took lead in get the States and Tennessee mar- United distributing and NV Sumatra’s United
kets. to mar- brand the United States cigarettes however, question doing, upon This case raises the of whether ket. In FTS built so corporation subject by to foreign already laid NV Suma- foundation jurisdiction in a Silmar particular forum state tra and worked in concert with approved entity it avails of another purposefully Trading, where itself approved cigarettes, Trading ap- of Sumatra Unico to supply chain United brand At employee, Hawe. least two through point Trading Silmar as its dis- exclusive related NV Sumatra to our activities of to the tributor United States market of support exercise nation’s market July of Hawe to “came Miami several state. personal jurisdiction by this “marketing to discuss strategy times” and building brand and making [United First, appears that NV Sumatra took cigarettes] a nationwide brand.” The mu- way to weave its steps several affirmative of goal tual Battah and Hawe to sell “was regulations web of re- through the federal master per thousand cases state.” To quired cigarettes sell to United goal further years prior selling States. the forma- of 1000 master FTS, for, 500,000 applied tion of NV Sumatra and of equivalent cases—the packs received, trademark for 10,000,000 a United States cigarettes Tennessee and —in cigarettes.10 brand NV Suma- United state, for, every other Battah asked tra to the explicitly also consented sale provided, promotional NV Sumatra materi- cigarettes its United brand the United cigarettes als for the United brand to be States, second during at least half placed retail Specifically, stores. NV 9, 2001, July 2001. On NV Sumatra sub- provided Sumatra “eight-by-eleven posters ingredient mitted an list its United United,’ Spirit they that said ‘The Centers cigarettes brand for Dis- health on warning had the them.”12 Bat- Prevention, ease as required Control tah created magazine also advertisements by federal law.11 Sumatra worked and attended trade shows NV Suma- telephone facsimile and FTS tra’s behalf. It at one such trade in obtaining approval assist the latter from show he met the Tennessee distribu- the Federal Trade for the ro- Commission he prod- tors to whom sold NV Sumatra’s warnings appear pack- tation of on the all together, ucts. Taken of these activi- ages cigarettes. brand The car- ties NV Sumatra are indicative tons of United brand arrived “something more” described in Justice Surgeon warning Miami with the General’s Breyer’s concurrence. label, already affixed NV Suma- tra letter to the United wrote a Summary Facts Pertinent Customs Service when FTS was notified Analysis Minimum Contacts marking imported issue with the ciga- *50 rettes. summary, In shows record in Sumatra, pertinent inadequate three facts deemed
Second, directly NV both and distributors, Jersey for New exer- courts to through other its worked with distribute, market, cise con- support opposite FTS to and ciga- sell First, variety ways. “regular rettes in a of After NV clusion here. a there was reapplied testimony 10. NV Sumatra for the trademark 12.NV that this of Sumatra claims in testimony 2003. later Battah is contradicted produced point-of-purchase FTS some and joint stipula- 11. Because State entered course, advertisement materials. Of these list, ingredient tion that FTS submitted the exclusive; easily mutually events are FTS NV Sumatra asserts that the State should original marketing could have received the estopped arguing contrary. from The pro- from materials NV Sumatra and also record indicates that the list submitted copies duced additional emblazoned with its in G.A. Avram of a law office Winston- own contact information. client, Salem, Carolina, North on behalf his Trading "N.V. Sumatra Tobacco Co.” defendant, the burden on the inter- course” of sales of NV “regular and flow” State, plain- and the cigarettes into ests brand Sumatra’s United forum Second, obtaining It 2002. NV interest in Tennessee from relief. tiff’s weigh its into the also in its determination products must delivered Sumatra system’s with judicial stream of commerce “the interstate interest international being in they obtaining were sold in the most resolu- awareness efficient controversies; its through in Tennessee quantities and the shared great tion of distributors, were that its distributors and in interest the several States further- Tennessee mar- targeting poli- specifically substantive social ing fundamental Sumatra, directly both NV Finally, ket. cies.” distributors, appears other through
and
its
(plurality
13. Because the concluded that the tice rather more State did meet its as to minimum “stream-of-commerce-plus” not burden rigorous test of contacts, prong it did not reach this second O’Connor that we Justice use Tennessee. process analysis. the due While this the South difference renders Car- analysis court’s minimum contacts olina noting majority 14. The is correct in that the us, impact value to it not limited does Supreme employed South Court Carolina analysis. persuasiveness of its reasonableness espoused by test Jus- "stream-of-commerce” may it be inconvenient for the trial court grant- [w]hile [NV] did consider after travel to Sumatra to the United States NV Sumatra’s competing motion.15 it, against to defend the action I am authorized to state that Justice in exercising State’s interest Lee, who has made substantial contribu- any such outweighs inconvenience. The analysis, joins tions in this dissent- State valid protecting has a interest in ing opinion. any against suits that arise itself smoking a person the United brand of
cigarettes. Given the volume those state], within sold [this
reasonable to be [NV] for Sumatra haled
into a [Tennessee] court. Co., Trading
NV Sumatra Tobacco S.E.2d at 223. HUGGINS, Delwin L. John P. Konvalin ka, as Trustee for an Undisclosed my view, it is neither unfair nor Beneficiary and in the Name Del unreasonable, circumstances, under these Party Huggins win aas Nominal Tennessee exercise over Sumatra, and there is no denial right to process. due The words of Hillel R. Ellsworth McKEE and Alternative Elder, legendary Jewish leader in Fuels, LLC, a Tennessee Limited Herod, Bang the time of apply to this Liability Company. jurisdictional issue the context of the integrity of historic tobacco settlement: Tennessee, Court of Appeals us, now, “If not who? If not when?” Section, Eastern at Knoxville. Oct. 2012 Session.
III. Conclusion Nov. 2012. For the set opinion, reasons forth in this Application Appeal for Permission to I believe only that the State has not made Denied prima showing facie of minimum con- 9,May tacts, required, as is but has exceeded that threshold, NV Sumatra has failed demonstrate it would be unreason-
able for courts per- to exercise jurisdiction.
sonal In consequence, I
would hold that NV Sumatra is not enti-
tled to a dismissal lack upon based
personal jurisdiction; unlike the Court of however,
Appeals, instead of granting summary judgment by
motion for
State, I would remand the case trial
court for summary consideration of that
judgment any motion and defenses *52 example,
15. For I require would Sumatra of the Escrow Act in Fund the trial court. challenges constitutionality to raise its