Vargas v. Hong Jin Crown Corp.
636 N.W.2d 291, 247 Mich. App. 278 (2001)
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Rule of Law:
A foreign manufacturer does not purposefully avail itself of the privilege of conducting activities within a forum state simply by placing its products into the stream of commerce with the knowledge they might be sold there. To establish personal jurisdiction consistent with due process, there must be additional conduct by the manufacturer purposefully directed toward the forum state.
Facts:
- Hong Jin Crown Corporation (HJC), a South Korean company, manufactures motorcycle helmets in South Korea.
- HJC sells its helmets in the United States to independent distributors located in California, Massachusetts, and Wisconsin, but not directly in Michigan.
- Specter's Cycles, a retailer in Owosso, Michigan, purchased an HJC helmet from HJC's Wisconsin distributor, Castle Sales Company.
- Daniel Vargas's father purchased this HJC helmet for his son from Specter's Cycles.
- In July 1994, Daniel Vargas was involved in a motorcycle accident while wearing the HJC helmet and suffered severe head injuries.
- HJC does not have offices, agents, employees, or property in Michigan, nor does it advertise or directly solicit business there.
- HJC had a distribution agreement with a 'Sales Group' to market its products in the United States, but only the California distributor formally signed it, and the agreement did not specifically target Michigan.
Procedural Posture:
- Cindy Vargas sued Hong Jin Crown Corporation (HJC) in a Michigan circuit court (trial court) for products liability.
- HJC filed a motion to dismiss for lack of personal jurisdiction.
- The trial court denied the motion without prejudice to allow for discovery.
- HJC later renewed its motion for summary disposition on the same grounds.
- The trial court again denied HJC's motion, finding that there was a sufficient connection between HJC and Michigan to support jurisdiction.
- HJC (appellant) appealed the trial court's order to the Court of Appeals of Michigan (intermediate appellate court), with Vargas as the appellee.
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Issue:
Does a foreign manufacturer's act of placing a product into the stream of commerce, with the mere awareness or expectation that it might reach the forum state through an independent, out-of-state distributor, constitute sufficient minimum contacts to satisfy due process requirements for exercising limited personal jurisdiction?
Opinions:
Majority - Griffin, J.
No. A foreign manufacturer's act of placing a product into the stream of commerce, even with the expectation that it will be sold nationwide, is not by itself a sufficient basis to establish the minimum contacts required by the Due Process Clause for personal jurisdiction. The court adopted the 'stream-of-commerce plus' theory, which requires additional conduct by the defendant that indicates an intent or purpose to serve the market in the forum state. Here, HJC's contacts with Michigan were too attenuated; it sold its helmets to an independent distributor in Wisconsin, and the helmet's arrival in Michigan was the result of the distributor's unilateral activity, not HJC's purposeful direction. The mere foreseeability that a product might reach Michigan is not enough; the defendant's conduct must be such that it should reasonably anticipate being haled into court there. HJC engaged in no such conduct, as it did not advertise in Michigan, design products for Michigan, or control the distribution system that brought the helmet into the state.
Analysis:
This decision solidifies Michigan's adoption of the 'stream-of-commerce plus' theory for personal jurisdiction, following the plurality opinion in Asahi Metal Ind Co. v. Superior Court. It clarifies that a foreign manufacturer can largely insulate itself from suit in states where it has no direct presence by dealing exclusively with independent distributors in other states. This places a higher burden on plaintiffs, who must now demonstrate specific, targeted activities by a foreign defendant toward the forum state, rather than simply showing the product's presence there through a distribution network. The ruling protects manufacturers from being subject to jurisdiction in any state where their product happens to be resold.
