McBead Drilling Co. v. Kremco, Ltd.
1987 La. LEXIS 9585, 509 So.2d 429 (1987)
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Rule of Law:
A state may exercise personal jurisdiction over a nonresident manufacturer consistent with due process if the manufacturer places a product into the stream of commerce with the reasonable expectation that it may be used in the forum state, and the cause of action arises from the product's use in that state.
Facts:
- McBead Drilling Company (McBead), an Arkansas corporation, contracted with Dickirson Corporation (Dickirson), a West Virginia corporation, to purchase a drilling rig.
- Dickirson manufactured a substructure and modified a basic rig from another company to meet McBead's specifications.
- In October 1981, Dickirson completed the sale and delivered the modified rig to McBead's yard in southern Arkansas.
- Shortly thereafter, McBead moved the rig across the state line to Caddo Parish, Louisiana, for use in its drilling operations.
- On December 3, 1981, the rig collapsed while in use by McBead in Caddo Parish, Louisiana.
- As required by the sales warranty, Dickirson had sent a service representative to Caddo Parish about a week before the rig collapsed to perform service on the rig.
Procedural Posture:
- McBead Drilling Company filed suit for damages against Dickirson Corporation in a Louisiana trial court.
- Dickirson filed an exception of lack of personal jurisdiction.
- The trial court sustained the exception and dismissed Dickirson from the lawsuit.
- McBead, as appellant, appealed the dismissal to the intermediate court of appeal.
- The court of appeal affirmed the trial court's dismissal, holding that exercising jurisdiction over Dickirson, the appellee, would violate constitutional due process.
- The Supreme Court of Louisiana granted certiorari to review the decision of the court of appeal.
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Issue:
Does a Louisiana court's exercise of personal jurisdiction over a nonresident manufacturer, whose product was sold to a company in a neighboring state and subsequently caused injury in Louisiana, violate the Due Process Clause?
Opinions:
Majority - Lemmon, Justice
No. The exercise of personal jurisdiction over Dickirson does not violate constitutional due process standards. A nonresident manufacturer's conduct and connection with a forum state are sufficient for jurisdiction when it sells a product to a customer in a neighboring state within a known regional market, making it reasonably foreseeable that the product would be used and cause injury in the forum state. The court distinguished this case from World-Wide Volkswagen Corp. v. Woodson, noting the defendant here is the manufacturer, not a local retailer. Dickirson sold a specialized drilling rig to a company located in the 'Ark-La-Tex triangle of oil drilling activity,' and thus should have reasonably anticipated being haled into a Louisiana court if the rig caused damages there due to manufacturing defects. This purposeful connection satisfies the 'minimum contacts' and 'fair play and substantial justice' requirements of due process.
Analysis:
This decision clarifies the 'stream of commerce' doctrine for personal jurisdiction over manufacturers in Louisiana. It establishes that a manufacturer serving a specific multi-state region has sufficient minimum contacts with each state in that region to be sued there for defects in its products. The ruling significantly distinguishes the jurisdictional analysis for a manufacturer versus a local retailer or distributor, making it easier to establish jurisdiction over manufacturers who knowingly serve a regional market. It reinforces that the key due process inquiry is whether the defendant purposefully availed itself of the market, not just whether the product's presence in the forum was a random, isolated occurrence.
