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State Farm Fire & Casualty Co. v. BMC USA Corp.

United States District Court, D. Minnesota

September 27, 2017

STATE FARM FIRE & CASUALTY COMPANY, as subrogee of William Neuenschwander, Plaintiff,
v.
BMC USA CORPORATION, TD HITECH ENERGY, INC., and SAMSUNG SDI CO. LTD., Defendants.

          GRANT SACKETT, HANSON, LULIC & KRALL, LLC, FOR PLAINTIFF.

          JEFFREY R. MULDER, BASSFORD REMELE, AND DAVID E. KAWALA, SWANSON, MARTIN & BELL, LLP, FOR DEFENDANT BMC USA CORPORATION.

          JOHN P. LORINGER, WILSON ELSER, FOR DEFENDANT TD HITECH ENERGY, INC.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM CHIEF JUDGE UNITED STATES DISTRICT COURT

         Brandon Dennis Wright, LEWIS BRISBOIS BISGAARD & SMITH LLP, 6385 South Rainbow Boulevard, Suite 600, Las Vegas, NV 89118, and James Russell Doyle, II, LEWIS BRISBOIS BISGAARD & SMITH, LLP, 1180 Peachtree Street, Northeast, Suite 2900, Athens, GA 30309, for defendant Samsung SDI Co. Ltd.[1]

         Plaintiff State Farm Fire & Casualty Co. (“State Farm”) brings this subrogation claim based on a fire that it alleges was caused by a battery pack designed and manufactured by Defendant TD HiTech Energy, Inc. (“TD HiTech”), a Taiwanese corporation. TD HiTech moves to dismiss the claims against it under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. State Farm and the distributor of the product, Defendant BMC USA Corp. (“BMC USA”), oppose TD HiTech's motion.

         Because the Court finds sufficient evidence of a regular flow of sales to the United States and the State of Minnesota, based on which TD HiTech would have anticipated being haled into court within the state, the Court will deny TD HiTech's motion.

         BACKGROUND

         State Farm brings this subrogation claim for amounts it paid its insured, William Neuenschwander (the “Insured”), for property damage resulting from a fire at his home in Bloomington, Minnesota, on August 8, 2014. (Notice of Removal, Ex. A (“Compl.”) ¶¶ 2, 10, June 1, 2016, Docket No. 1.) State Farm alleges that the fire originated from a charging battery that TD HiTech designed and manufactured. (Id. ¶¶ 8, 13.) State Farm alleges that TD HiTech negligently designed, manufactured, and/or marketed the battery, and that TD HiTech breached implied warranties with respect to the product. (Id. ¶¶ 20-21, 27-28.)

         TD HiTech is a Taiwanese corporation, with its principal place of business in Taipei City, Taiwan, that specializes in manufacturing and selling lithium batteries. (Decl. of TD HiTech Energy, Inc. (“TD HiTech Decl.”) ¶¶ 2-3, Jan. 18, 2017, Docket No. 38.) TD HiTech contends that it does not do any direct business in or targeted at Minnesota: it does not sell goods in Minnesota, employ a sales force in Minnesota, “direct sales of its products to consumers in Minnesota, ” “direct advertising of its products in Minnesota, ” or “solicit[] business from Minnesota residents, directly or through any form of advertising expressly targeted toward the residents of Minnesota.” (Id. ¶¶ 3-11, 15-23.) TD HiTech also contends that it “has never sought to serve the market in Minnesota indirectly or through others, ” nor has it “entered into any contracts, service agreements or other agreements for the purpose of promoting or advertising any product or service within” Minnesota. (Id. ¶¶ 12-13.)

         However, TD HiTech has sold many batteries in the United States and significant numbers of its batteries have been sold to Minnesota customers. Between 2015 and February 2017, TD HiTech sold and shipped 5, 836 batteries to the United States, with a total cost of more than $60 million. (Decl. of Jeffrey R. Mulder (“Mulder Decl.”), Ex. 3[2]at 1-2, Mar. 31, 2017, Docket No. 69.) TD HiTech admits to having customers in California and Massachusetts, including BMC USA. (Id., Ex. 1 at 4.) BMC USA has 26 customers in Minnesota, including the Insured's company, Mobile Entertainment, and BMC USA has “sold hundreds of batteries manufactured by TD HiTech to customers in Minnesota, either in connection with the sale of bikes or as stand-alone transactions.” (Decl. of Markus Eggimann (“Eggimann Decl.”) ¶ 5, Mar. 31, 2017, Docket No. 68.) Mobile Entertainment alone purchased ten bicycles and ten additional batteries at a cost of $30, 485.00 in 2014. (Mulder Decl., Ex. 13.) Records suggest Mobile Entertainment has purchased sixty-two TD HiTech batteries since 2014. (Eggimann Decl., Exs. 2-3.) TD HiTech's website shows that its batteries are used in Stromer Electric bikes, (Aff. of Grant Sackett (“Sackett Aff.”), Ex. 2, Mar. 31, 2017, Docket No. 76), and the website includes a location map with three locations in the United States, including one in the Midwest, (id., Ex. 1).

         State Farm contends that TD HiTech also sent an agent, Michael Fritz, to Minnesota. Fritz attended two pre-suit inspections in the Midwest - in Minnesota (this case) and Wisconsin - and his business card represents that he works for “HiTech Energy” as “eBike Battery Technical Representative North America.” (Decl. of Jeffrey R. Mulder, Ex. 7 at 29, Jan. 24, 2017, Docket No. 49; Decl. of Markus Eggimann, Ex. A at 4, Jan. 24, 2017, Docket No. 50.) In response, TD HiTech states that it “did, for a limited period of time, contract with . . . Fritz[] to assist with certain local events - such as the initial investigation of the subject incident - and provide feedback to TD HiTech, ” but as of March 17, 2017, “Fritz [was] no longer contracted to perform this work.” (Mulder Decl., Ex. 8 at 35.)

         ANALYSIS

         I. ...


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