Stewart v. Bus and Car Co.
47 Ohio Op. 2d 376, 19 Ohio Misc. 129, 293 F. Supp. 577 (1968)
Rule of Law:
A federal court exercising diversity jurisdiction may assert personal jurisdiction over a foreign manufacturer under a state's long-arm statute if the manufacturer derives "substantial revenue" from goods used in the state and could reasonably expect its products to be used or affect persons in that state, satisfying both statutory requirements and federal due process "minimal contacts" principles.
Facts:
- Plaintiff was injured during the course of his duties as a bus driver for Continental Trailways, Inc.
- Plaintiff's injury involved a 1965 Silver Eagle Bus manufactured by the defendant, N. V. Cabriefab, which has its offices in Brugge, Belgium.
- N. V. Cabriefab manufactured 215 Silver Eagle buses in 1966.
- Out of the 215 buses manufactured in 1966, 13 were purchased by customers in the continental United States.
- Two of these 13 buses were sold directly to Lakeshore Coach Company in Columbus, Ohio, for an approximate total of $90,000.
- Eleven of these 13 buses were sold to American Bus Lines, Inc., in Los Angeles, California.
- At least one of the buses sold to American Bus Lines, Inc., the one plaintiff was driving, was being operated by Continental Trailways, Inc., through Ohio on a route from Fort Wayne, Indiana, to Detroit, Michigan, stopping in Swanton, Ohio.
- The purchase price for the specific bus plaintiff was driving was $46,000.00.
Procedural Posture:
- Plaintiff filed a personal injury lawsuit in the United States District Court for the Northern District of Ohio, asserting jurisdiction based on diversity of citizenship.
- Plaintiff served the complaint and summons upon the Ohio Secretary of State, relying on Ohio Revised Code Section 2307.383.
- Defendant, a foreign corporation, entered an appearance for the limited purpose of moving to dismiss the action for lack of personal jurisdiction and to quash the service of process.
- Defendant filed an affidavit from its auditor stating it does not transact or solicit business in Ohio, nor engage in conduct from which it derives substantial revenue in the state.
- Plaintiff submitted interrogatories to the defendant regarding its business activities and sales, to which the defendant provided answers.
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Issue:
Does a federal court in Ohio have personal jurisdiction over a foreign bus manufacturer under Ohio's long-arm statute (ORC 2307.382(A)(4) and (5)) when the manufacturer derives substantial revenue from buses foreseeably used in Ohio, including sales directly to an Ohio company and sales to out-of-state companies whose buses operate within Ohio, thereby establishing "minimal contacts" consistent with due process?
Opinions:
Majority - Don J. Young, District Judge
Yes, a federal court in Ohio has personal jurisdiction over the foreign bus manufacturer because the manufacturer derived substantial revenue from goods used in Ohio and could reasonably expect its products to be used there, establishing sufficient "minimal contacts." The court found that the Ohio long-arm statute, particularly subsections (A)(4) and (A)(5) of Section 2307.382, extends jurisdiction to the limits permissible under the Fourteenth Amendment's Due Process Clause, as interpreted by International Shoe Co. v. State of Washington. The court considered the sale of the plaintiff's bus for $46,000, noting that it was undeniably substantial revenue given the relatively small total production and high unit price. Furthermore, the direct sale of two buses to Lakeshore Coach Company in Columbus, Ohio, for approximately $90,000, clearly constituted "substantial revenue from goods used in this state." These three buses accounted for almost one-fourth of the defendant's total sales in the continental United States for 1966. The court also concluded that a manufacturer of commercial passenger buses, designed for interstate travel and sold to U.S. bus lines, must reasonably expect its product to be used in states like Ohio. This purposeful availment of the privilege of conducting activities within the forum state, as required by Hanson v. Denckla, was met, distinguishing it from cases where contacts are solely the unilateral acts of the plaintiff. The court differentiated the case from Velandra v. Regie Nationale Des Usines Renault by highlighting the commercial nature and higher value of the buses, the greater potential impact on Ohio citizens, and the lack of an alternative forum for the plaintiff.
Analysis:
This case clarifies the application of Ohio's long-arm statute in product liability cases involving foreign manufacturers, particularly regarding the "substantial revenue" and "reasonable expectation" clauses. It emphasizes that foreseeability of a product's use within a state, especially for commercial goods designed for interstate travel, can establish sufficient minimum contacts for personal jurisdiction. The decision illustrates how courts assess the relative nature of "substantial revenue," considering unit price, total sales, and the proportion of sales linked to the forum state. It significantly impacts future cases by reaffirming a broad interpretation of long-arm statutes consistent with due process, making it easier for plaintiffs injured by foreign-manufactured products used in Ohio to pursue claims locally.
