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Kuhar v. Petzl Co.

United States District Court, D. New Jersey

August 6, 2018

NICHOLAS KUHAR, et al., Plaintiffs,
v.
PETZL COMPANY, d/b/a PETZEL; PETZL AMERICA, INC. d/b/a PETZL; BAILEY'S CORPORATION; UNLIMITED XYZ CORPORATIONS; UNLIMITED JOHN DOES; UINTAH FASTENER & SUPPLY; THOMPSON MANUFACTURING; PORTEOUS FASTENER COMPANY; BRIGHTON-BEST; QUALITY PLATING; Defendants.

          Brett Schneider, Esq. Kevin P. McCann, Esq. Matthew Weng, Esq. Shanna McCann, Esq. CHANCE & MCCANN LLC Attorneys for Plaintiffs

          James D. Burger, Esq. Robert Devine, Esq. WHITE & WILLIAMS, LLP Libertyview Attorneys for Petzl Defendants

          C. Scott Toomey, Esq. Daniel J. Kain, Esq. LITTLETON PARK JOYCE UGHETTA & KELLY LLP Attorneys for Defendant Thompson Manufacturing

          OPINION

          JEROME B. SIMANDLE U.S. DISTRICT JUDGE.

         I. INTRODUCTION

         This is a personal injury case with allegations of a defective climbing harness manufactured or sold by Defendants. This matter is before the Court on the motion of Defendant Thompson Manufacturing (“Defendant, ” “Thompson” or “TMI”) to dismiss Plaintiffs Nicholas Kuhar (“Kuhar” or “Plaintiff”) and Julie Kuhar's (collectively, “Plaintiffs”) Second Amended Complaint [Docket Item 103] for lack of personal jurisdiction over TMI. [Docket Item 128.] This motion renews TMI's previous motion [Docket Item 56], which the Court previously denied without prejudice before allowing jurisdictional discovery [Docket Items 84 & 85], which has now been completed. Defendant Petzl America (“Petzl”) submitted a response brief in opposition [Docket Item 142], in which Plaintiffs joined [Docket Item 144]. TMI submitted a reply [Docket Item 145], as well as a letter alerting the Court to supplementary authority [Docket Item 168], to which Petzl responded [Docket Item 177]. For the reasons set forth below the Court will GRANTxxx the motion to dismiss.

         II. BACKGROUND

         As the Court has previously stated, “[o]n December 24, 2013, Plaintiff Nicholas Kuhar was cleaning gutters at a house in Alloway when the ‘Micrograb' wire core flip-line safety harness with which he had secured himself failed, causing him to fall thirty-seven feet onto the concrete below[, ]” whereupon he sustained several serious injuries. [Docket Item 84 at 2.]

         The Second Amended Complaint alleges that Plaintiff was an end-user who was injured by a defective “safety harness” containing a “carabiner” (also referred to as a “rope-grab” or the “MicroGrab” in the briefing [Docket Item 128-3 at 6 n.3]) that was “manufactured, designed, produced, advertised, promoted, sold, distributed and otherwise introduced into the stream of commerce by the specifically named defendants.” [Docket Item 103 at 1 ¶ 1.] Plaintiffs allege that the safety harness “failed to prevent personal injury to its user through a defective carabiner and bolt; [f]ailed to adequately warn its user of the dangers inherent with the safety harness; [f]ailed to adequately warn its user of the risks involved with using the safety harness; and [o]therwise completely failed to perform in the manner as advertised.” Id. at 1-4 ¶¶ 2-9 (allegations referred to collectively as “the Defects”). With regard to TMI specifically, Plaintiffs allege that TMI “advertised, promoted, sold, distributed, and otherwise introduced into the stream of commerce the safety harness. . . . including all of its components[.]” Id. at 2 ¶ 5.

         The Second Amended Complaint also states that TMI is “a corporation organized and existing under the laws of the State of Utah, with its principal place of business located in Clearfield, Utah.” Id. at 4 ¶ 8.

         As the Court previously stated in its Opinion denying without prejudice TMI's earlier motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2):

[TMI] produced and sold a component part to [Petzl] that was allegedly used [in] the Petzl Micrograb device that is the subject of the present lawsuit. TMI was incorporated in and maintains its principal place of business in the State of Utah, where its corporate offices and manufacturing facilities are also located. TMI's President, Travis Lane, affirms that TMI does not own, rent, lease, occupy or maintain any property in the State of New Jersey; does not employ anyone or conduct any operations in the State of New Jersey; does not sell, advertise, market or deliver its products to, or derive revenue from sales of its products from, the State of New Jersey; has not paid income, property or any other tax to the State of New Jersey, nor is it registered or licensed to conduct business in the state, nor has it authorized anyone to act as its agent in the state; and does not and has never obtained banking, accounting or legal services from companies located in the State of New Jersey.

[Docket Item 84 at 6-7 (internal citations omitted).] The Court also noted Plaintiffs' and Petzl's contentions (and supportive documentation) that

a related company, Rock Exotica, sells similar or identical products in the State of New Jersey, and that therefore TMI must be aware that its products are incorporated into devices that are sold in New Jersey[;] . . . that the climbing devices shown on Rock Exotica's website . . . are the same as those purchased by Petzl from TMI[;] . . . that Rock Exotica's website directs consumers to two authorized dealerships in New Jersey where they can purchase Rock Exotica products[;] . . . that TMI and Rock Exotica share a founder and owner, Rock Thompson[;] . . . that the two companies' manufacturing facilities appear to be located at the same Freeport Center in Clearfield, Utah[;] . . . that the two companies apparently share a phone number and website[;] . . . and that a number of employees represent online that they are affiliated with both companies[.]

[Docket Item 84 at 7-8 (internal citations omitted).]

         The parties, having completed jurisdictional discovery [Docket Item 128-3 at 11 n.5], allege the following additional relevant facts[1]:

         The item Plaintiff bought in New Jersey was purchased from Defendant Bailey's in January of 2006, and was a “flipline kit” consisting of “several components: 1) a wire core flipline/lanyard (i.e., a rope with a core made of wire); 2) an oval screw link; and 3) a Petzl rope grab.” [Docket Item 128-3 at 8, 6.] The rope grab contains a spring-loaded cam, which (when not under pressure from the tension of an arborist's body weight) “rotates on an ‘axle' consisting of a nut and shoulder bolt. Plaintiffs here claim the shoulder bolt fractured, apparently causing the flipline to lose tension and allowing Mr. Kuhar to fall.” Id. at 7-8. Bailey's put together the kit by compiling the separate components and marketing the combination “as a Bailey's flipline kit.” Id. at 8. Bailey's purchased the rope grab from Defendant Petzl America. Id. Petzl America “obtained [the rope grab] from TMI, who assembled it at Petzl America's request. . . . TMI manufactured the body and the cam of the Micrograb. TMI did not manufacture the shoulder screw or bolt that allegedly fractured or the nut that secured it. Rather, TMI purchased the nut and bolt as finished products from co-defendant Uintah Fastener & Supply[.]” Id. (internal citations omitted).

         With regard to TMI itself, TMI states:

Since its inception in 1991, TMI has maintained and still maintains its principal place of business in Utah. TMI's corporate offices and manufacturing facilities are located in Utah. TMI never had offices, manufacturing facilities or places of business within New Jersey. It never owned, leased, rented, occupied or maintained any real property within New Jersey. It has never maintained a telephone listing or post office box within New Jersey. In short, TMI has never had any physical connection to the State of New Jersey.
TMI has never employed anyone within New Jersey. TMI has never sold products to customers in New Jersey. It has never had distributors within the state and has never delivered products to or within New Jersey. TMI has never derived revenue from sales to customers located in New Jersey. TMI has never advertised or marketed in, nor has it directed any advertising or marketing towards, New Jersey residents. TMI has never entered into any contracts in New Jersey. TMI has never exercised any control over any person, firm or corporation located within the state.
TMI may have purchased aluminum on two occasions in 2013-4 from a metals broker who had an address in New Jersey but may have been physically located in Europe. Other than those two transactions and the possibility that products purchased from websites like Amazon or McMaster have unknown origins that conceivably could have included New Jersey, TMI has never even sourced or purchased materials for its business from companies located in New Jersey.

[Docket Item 128-3 at 12-14.] TMI also again alleges that it has never had any financial or legal relationships with the State of New Jersey or any person or entity residing in New Jersey. Id. at 14.

         In its Motion, TMI describes its “[c]orporate [h]istory and [r]elationship [w]ith Rock Exotica, LLC” as follows:

TMI was incorporated in 1991 pursuant to the laws of the State of Utah. A Petzl-related entity called Spirit of St. Luis was TMI's original majority shareholder. TMI was formed to be a contract manufacturer for Petzl France[] and its American distributor. TMI remained an exclusive contract manufacturer for Petzl France and its American distributor until 2002-[0]3. In approximately 1998, TMI began manufacturing rope grabs for Petzl. The Micrograb was one of the rope grabs TMI manufactured exclusively for Petzl.
In 2002-[0]3, Rock Thompson purchased the outstanding shares of TMI and became the sole shareholder. TMI remained a contract manufacturer for Petzl but also began to act as a contract manufacturer for other customers. TMI has never and does not sell any products to end users. It does not own any intellectual property.
Mr. Thompson remained the sole shareholder until TMI's stock was purchased by Rock Exotica, LLC when it came into existence on December 24, 2012. Through that transaction, TMI became a wholly owned subsidiary of Rock Exotica, LLC. TMI remains a wholly owned subsidiary of Rock Exotica, LLC today.

Id. at 14-15.

         The nature of the relationship between parent corporation Rock Exotica and subsidiary TMI is the subject of much dispute between the parties. As noted below, at the time of Plaintiff's purchase of this equipment in January, 2006, TMI and its related corporation, Rock Exotica Equipment, LLC, existed. Later, Rock Exotica Equipment was merged into a new entity, Rock Exotica, LLC, in 2012. For general jurisdiction, the activities of TMI and Rock Exotica Equipment, LLC and Rock Exotica, LLC (and whether TMI is the alter ego of either or both entities) will be relevant. For specific jurisdiction, on the other hand, the activities of TMI and Rock Exotica Equipment, LLC, pertaining to the 2006 sale of the climbing harness to Mr. Kuhar in New Jersey will be relevant, as Rock Exotica, LLC, did not exist in 2006. As Rock Exotica Equipment's successor, however, Rock Exotica may be liable to the same extent as Rock Exotica Equipment would have been.

         TMI depicts two companies that share certain commonalities (as discussed supra and in the Court's earlier Opinion) but are, in the main, separate: Rock Exotica (unlike TMI) has no employees, id. at 15; unlike TMI, Rock Exotica “does not manufacture products” but rather “is a marketing and distribution company for products used in the fall protection industry[, ]” id., and “markets its products to smaller nonexclusive distributors” of such products, with 1-3 of its distributors (since 2012) being located in New Jersey, although it “does not have dealership or financing agreements with any distributor of its products[, ]” including the New Jersey distributors. Id. at 15-16. TMI asserts that Rock Exotica, LLC and TMI “run their business [sic] separately and keep completely separate books. . . . TMI has customers other than Rock Exotica, LLC and Rock Exotica, LLC sources products from vendors other than TMI”[2]; the two companies use their own separate enterprise computer systems. Id. at 16. Sales and purchase transactions between the two companies are logged and put into effect without special consideration that the seller/buyer is one with which there is a corporate relationship rather than an unrelated seller/buyer. Id.

         TMI notes that, while it is TMI employees who provide “various administrative services to Rock Exotica, LLC” (as, again, Rock Exotica, LLC has no employees of its own), this occurs “pursuant to an administrative services agreement” that TMI characterizes as “unwritten but arms-length[, ]” covering 12 TMI employees at present, who accordingly devote “a portion of [their] work time” to “serve [the] marketing and distribution business” needs of Rock Exotica, LLC, (e.g., accounting, creating sales orders and invoices, and shipping activities). Id. at 17. In exchange for these services, Rock Exotica, LLC “makes monthly payments to TMI[, ]” the amount of which “is adjusted on an annual basis and is calculated based on the number and nature of the individuals whose services are needed, their roles and responsibilities, and the amount of their time needed by TMI [sic][3].” Id. at 17-18.

         Petzl [Docket Item 142 at 8-18] and Plaintiffs [Docket Item 144] depict the relationship between Rock Exotica, LLC and TMI differently. They point to the following facts in support of finding that the two companies are alter egos:

• “The president of TMI, Travis Lane, who is also an owner of Rock Exotica, testified that the products TMI manufactures for Rock Exotica are marketed in New Jersey. . . . [and] that Rock Exotica has [two] authorized dealers who sell the TMI[-]manufactured products in New Jersey” as well as the Rock Exotica website, which “sells climbing products nationwide, including into New Jersey, ” in contrast to TMI, which has no website [Docket Item 142 at 11, 13];
• “Rock Exotica LLC is owned by Rock Thompson (20%) and JPL [I]ndustries (80%). Rock Exotica owns 100% of TMI” such that the two corporations therefore “have common ownership[, ]” and “the business decisions for both companies are made by the same three people[:] . . . Travis Lane, Brandon Lane and Rock Thompson.” id. at 11-12; • “Rock Exotica Equipment, LLC was merged into Rock Exotica, LLC in 2012, however both entities traded/trade as ‘Rock Exotica, '” and one or the other entity, using that as its trade name, “has been selling products for 28 years, which includes the early 2006 time period when the subject Micrograb was sold” and “at all times relevant to this case[, ]” id.[4];
• “Rock Exotica has no employees. All work of Rock Exotica is performed by TMI employees” who “are issued a paycheck by TMI” for this work; moreover, “TMI employees even determine what type [of] work should be done for Rock Exotica” including “having a TMI employee determine whether Rock Exotica needs to have TMI manufacture more products to sell under the Rock Exotica name[, ]”; Petzl argues that “Rock Exotica exists only through the actions of TMI employees who are paid via TMI paycheck for the work. . . . In this regard TMI exerts so much control over Rock Exotica that Rock Exotica does not meaningfully exist as a separate entity . . . [because it] acts . . . exclusively through TMI employees, ” id. at 12;
• Travis “Lane, who is president of TMI and denies any employment relationship with Rock Exotica, refers to Rock Exotica as ‘us' when describing [Rock Exotica's] sales process [to a New Jersey customer or authorized dealer, ]” id. at 13, citing Lane Dep., Docket Item 128-17, at 35 (“They call us up. And they say we would like to buy your product” (emphasis added)); refers to the Rock Exotica website as ...

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