GREEN v. CS UNITEC, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

DWAYNE GREEN, JR., )

)

Plaintiff, )

)

v. ) 1:20-CV-130

)

CS UNITEC, INC., )

NIAGRA MACHINE, INC., and )

PORTAMIX LTD., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge.

Before the Court is a Motion to Dismiss by Defendant Portamix, Ltd. (“Portamix”),

asserting lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil

Procedure. (ECF No. 20.) The Court noticed a hearing on the motion which occurred on

April 21,2021, with counsel for all parties present. At the hearing counsel for Plaintiff, Peter

F. Asmer, Jr., conceded that Plaintiff could not meet its burden (a prima facie showing or

otherwise) of establishing that this Court has personal jurisdiction over Defendant Portamix.

The Court and Plaintiff’s counsel engaged in the following colloquy on the record in open

court:

COURT: So you are acknowledging on the record that you don’t have a basis for

this Court to exercise personal jurisdiction over Portamix?

COUNSEL: I am, Your Honor.

However, because it is the Court’s obligation to determine whether it possesses personal

jurisdiction over Defendant Portamix as a matter of law, the Court for the reasons stated

below, will grant Defendant’s motion to dismiss.

I. BACKGROUND

This action was initiated by Plaintiff Dwayne Green, Jr., a resident of the state of North

Carolina, alleging that he suffered injuries while working on a construction job site where he

was responsible for operating a MEGA HIPPO Mixing Station (“Subject Machine”).1 (ECF

Nos. 1; 6 ¶¶ 1, 2, 23, 29.) In his Amended Complaint, Plaintiff brings claims against three

Defendants: Portamix, a New Zealand company, who designs and manufactures the Subject

Machine, (ECF No. 6 ¶¶ 7, 12); CS Unitec, Inc. (“Unitec”), a Connecticut corporation that

imports, sells, and distributes the Subject Machine throughout the United States, ( id. ¶¶ 3, 4);

and Niagra Machine, Inc. (“Niagra”), a Pennsylvania company with a satellite office in North

Carolina, who sold and shipped the Subject Machine to Plaintiff’s employer, (id. ¶¶ 5, 6, 20).

Only Portamix filed the instant motion to dismiss all claims against it pursuant to Rule

12(b)(2), arguing that this Court does not have general or specific personal jurisdiction over it.

(ECF No. 21 at 5, 8–12.) Plaintiff objects, arguing that this Court has specific jurisdiction

over Portamix based on the stream of commerce theory. (ECF No. 24 at 5.)

II. STANDARD OF REVIEW

A challenge to personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil

Procedure is a question of law, and the plaintiff bears the ultimate burden of proving

jurisdiction. See Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016); Carefirst of Md., Inc. v.

1 According to Plaintiff, the MEGA HIPPO machine “mixes materials in a bucket using an electric motor

Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citation omitted). The Fourth

Circuit has observed that the plaintiff’s burden of proof “varies according to the [procedural]

posture of [the] case and the evidence that has been presented to the court.” Grayson, 816 F.3d

at 268.

Where the court decides a pretrial personal jurisdiction question without conducting

an evidentiary hearing—“reviewing only the parties’ motion papers, affidavits attached to the

motion, supporting legal memoranda, and the allegations in the complaint”—a plaintiff “need

only make a prima facie showing of personal jurisdiction” to withstand a jurisdictional challenge.

Id. “[A] plaintiff makes a prima facie showing of personal jurisdiction by presenting facts that,

if true, would support jurisdiction over the defendant.” See Universal Leather, LLC v. Koro AR,

S.A., 773 F.3d 553, 561 (4th Cir. 2014) (citing Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d

857, 862 (9th Cir. 2003)). When considering whether the plaintiff has made a prima facie

showing of jurisdiction, the court “must construe all relevant pleading allegations in the light

most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for

the existence of jurisdiction.” Id. at 558 (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.

1989)). Allegations in the complaint are taken as true, however, “only if they are not

controverted by evidence from the defendant.” Vision Motor Cars, Inc. v. Valor Motor Co., 981

F. Supp. 2d 464, 468 (M.D.N.C. 2013). If both sides present evidence, “factual conflicts must

be resolved in favor of the party asserting jurisdiction for the limited purpose of determining

whether a prima facie showing has been made.” Id.

Where, however, the parties have engaged in discovery on the issue of personal

jurisdiction and have submitted evidence beyond the pleadings, the court “must hold the

plaintiff to its burden of proving facts, by a preponderance of the evidence, that demonstrate

the court’s personal jurisdiction over the defendant.” Grayson, 816 F.3d at 268; see also AARP

v. Am. Family Prepaid Legal Corp., 604 F. Supp. 2d 785, 797 (M.D.N.C. 2009) (holding the

plaintiff to a preponderance of the evidence standard because the parties had engaged in

jurisdictional discovery).

III. DISCUSSION

As a threshold issue, the Court must determine whether Plaintiff need only make a

prima facie showing of personal jurisdiction to withstand this jurisdictional challenge, as Plaintiff

asserts in his Response, (ECF No. 24 at 4), or whether the Court must hold the Plaintiff to

the higher burden of proving facts by a preponderance of the evidence. As earlier stated,

where a court decides a pretrial jurisdiction question without conducting an evidentiary hearing

and “reviewing only the parties’ motion papers, affidavits attached to the motion, supporting

legal memoranda, and the allegations in the complaint,” the general rule is that a plaintiff “need

only make a prima facie showing of personal jurisdiction” to withstand a jurisdictional challenge.

Grayson, 816 F.3d at 268. However, though the instant motion is a pretrial motion and no

evidentiary hearing has occurred, Plaintiff’s counsel conferred with opposing counsel

following the filing of Portamix’s motion to dismiss and obtained a copy of the Distributor

Agreement (“Agreement”) between Portamix and its United States’ distributor, Unitec. (ECF

No. 24 at 3.)

Plaintiff, in his Response, relies almost exclusively on the Agreement exchanged

between counsel to support his jurisdictional argument. (See generally id.) This Agreement is

evidence that goes well beyond the allegations in the Amended Complaint and falls squarely

outside of the documents generally considered when a court allows plaintiffs to proceed on

the lesser burden. Moreover, though Counsel for Plaintiff makes a conclusory statement that

they are not waiving the right to oppose Defendant’s motion on any ground including “its

arguments that Plaintiff’s Amended Complaint already alleges sufficient facts to establish

personal jurisdiction over Portamix,” (see ECF No. 24-1, ¶ 2), Plaintiff fails to make such

argument or point to specific allegations in the Complaint to support its personal jurisdictional

claim in its Response. Because, however, the Court concludes below that Plaintiff has failed

to meet its burden under either standard, the Court need not address this issue further. The

Court will now move to its discussion of the merits of Defendant’s motion.

A. Personal Jurisdiction Generally

“The Due Process Clause of the Fourteenth Amendment constrains a State’s authority

to bind a nonresident defendant to a judgment of its courts.” Walden v. Fiore, 571 U.S. 277,

283 (2014) (citation omitted). A federal district court can exercise personal jurisdiction over a

nonresident defendant only if “(1) such jurisdiction is authorized by the long-arm statute of

the state in which the district court sits; and (2) application of the relevant long-arm statute is

consistent with the Due Process Clause of the Fourteenth Amendment.” Universal Leather,

773 F.3d at 558 (citation omitted). North Carolina’s long-arm statute “permits the exercise of

personal jurisdiction . . . to the outer limits allowable under federal due process.” Id.; Dillon v.

Numismatic Funding Corp., 231 S.E.2d 629, 630–31 (N.C. 1977) (holding that, by enacting N.C.

Gen. Stat. § 1–75.4(1)(d), the North Carolina General Assembly “intended to make available

to the North Carolina courts the full jurisdictional powers permissible under federal due

process”). The two-prong test, therefore, “merges into [a] single question,” allowing the court

to proceed directly to the constitutional analysis. Universal Leather, 773 F.3d at 558–59.

Under the Due Process Clause of the Fourteenth Amendment, two paths permit a

court to exercise personal jurisdiction over a nonresident defendant. Universal Leather, 773

F.3d at 559. One path is general jurisdiction, “which permits a court to assert jurisdiction over

a defendant based on a forum connection unrelated to the underlying suit.” Walden, 571 U.S.

at 283 n.6. The other path is specific jurisdiction, which “depends on an ‘affiliatio[n] between

the forum and the underlying controversy.’” Id. (alteration in original) (quoting Goodyear

Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).

Portamix argues in its motion that it is not subject to either general or specific

jurisdiction in North Carolina. (ECF No. 21 at 5, 11–13.) Plaintiff concedes that “general

jurisdiction is not at issue” and seeks only to proceed on the basis that this Court has specific

jurisdiction. (ECF No. 24 at 5.) Therefore, the Court’s discussion will focus on the question

of whether it has specific jurisdiction over Defendant Portamix.

B. Does The Court Have Specific Jurisdiction Over Portamix

Specific jurisdiction requires “that the relevant conduct have such a connection with

the forum state that it is fair for the defendant to defend itself in that state.” CFA Inst. v. Inst.

of Chartered Fin. Analysts of India, 551 F.3d 285, 292 n.15 (4th Cir. 2009); Universal Leather, 773

F.3d at 559 (recognizing that the touchstone of the specific jurisdictional inquiry is fairness).

A court may exercise specific jurisdiction when “the defendant has purposefully directed [its]

activities at residents of the forum and the litigation results from alleged injuries that arise out

of or relate to those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal

quotations and citation omitted). The Fourth Circuit employs a three-prong test to determine

whether the exercise of specific jurisdiction comports with the requirements of due process:

“(1) the extent to which the defendant purposefully availed itself of the privilege of conducting

activities in the forum state; (2) whether the plaintiff’s claims [arose] out of those activities;

and (3) whether the exercise of personal jurisdiction is constitutionally reasonable.” Universal

Leather, 773 F.3d at 559 (alteration in original) (quoting Tire Eng’g & Distrib., LLC v. Shandong

Linglong Rubber Co., 682 F.3d 292, 302 (4th Cir. 2012)). Only if the court finds that the plaintiff

has satisfied the purposeful availment prong does the court need to consider the remaining

elements of the specific jurisdiction test. Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273,

278 (4th Cir. 2009).

The “purposeful availment” prong of the analysis “ensures that a defendant will not be

haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts.” Burger

King, 471 U.S. at 475 (quotations and citation omitted). It is rooted in the concept of minimum

contacts and contemplates whether “the defendant’s conduct and connection with the forum

[s]tate are such that he should reasonably anticipate being haled into court there.” Universal

Leather, 773 F.3d at 559 (alteration in original) (quoting Fed. Ins. Co. v. Lake Shore, Inc., 886 F.2d

654, 658 (4th Cir. 1989)). The analysis is “flexible” and involves a case-by-case consideration

of several factors. Id. at 560 (quoting Tire Eng’g, 682 F.3d at 302). In the business context,

courts consider the following non-exhaustive list:

(1) “whether the defendant maintains offices or agents in the

forum state;” (2) “whether the defendant owns property in the

forum state;” (3) “whether the defendant reached into the forum

state to solicit or initiate business;” (4) “whether the defendant

deliberately engaged in significant or long-term business activities

in the forum state;” (5) “whether the parties contractually agreed

that the law of the forum state would govern disputes;” (6)

“whether the defendant made in-person contact with the resident

of the forum in the forum state regarding the business

relationship;” (7) “the nature, quality and extent of the parties’

communications about the business being transacted;” and (8)

“whether the performance of contractual duties was to occur

within the forum.”

Id. (quoting Consulting Eng’rs, 561 F.3d at 278).

Portamix argues that this Court lacks personal jurisdiction over it because it “has never

‘purposefully availed’ itself of North Carolina in any fashion.” (ECF No. 21 at 11.) On the

other hand, Plaintiff contends that he can establish that this Court has specific jurisdiction

over Portamix because it purposefully availed itself of the privilege of conducting business in

North Carolina by entering the Subject Machine into the stream of commerce. (ECF No. 24

at 5.) According to Plaintiff, Portamix knew orders could come from anywhere in the United

States and understood that by selling its product to Unitec, the distributor, its product would

likely be present in any U.S. state, including North Carolina. (Id. at 6.) Plaintiff uses the

Distributor Agreement, (ECF No. 24-3), almost exclusively as outlined above, in support of

this contention, (ECF No. 24 at 6–7).

The stream of commerce theory “refers to the movement of goods from manufacturers

through distributors to consumers.” J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 881,

(2011). The Supreme Court has stated that “a defendant’s placing goods into the stream of

commerce ‘with the expectation that they will be purchased by consumers in the forum State’

may indicate purposeful availment.” Id. at 881–82 (quoting World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 298 (1980)). However, as the Court recognized, this theory “does not

amend the general rule of personal jurisdiction”; rather, “[i]t merely observes that a defendant

may in an appropriate case be subject to jurisdiction without entering the forum.” Id. at 882.

In such a case, the principal inquiry remains “whether the defendant’s activities manifest an

intention to submit to the power of a sovereign.” Id. “The defendant’s transmission of goods

permits the exercise of jurisdiction only where the defendant can be said to have targeted the

forum; [because,] as a general rule, it is not enough that the defendant might have predicted

that its goods will reach the forum State.” Id. As explained further by the Fourth Circuit,

To permit a state to assert jurisdiction over any person in the

country whose product is sold in the state simply because a

person must expect that to happen destroys the notion of

individual sovereignties inherent in our system of federalism.

Such a rule would subject defendants to judgment in locations

based on the activity of third persons and not the deliberate conduct of the

defendant, making it impossible for defendants to plan and

structure their business contacts and risks.

Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 945 (4th Cir. 1994) (emphasis added).

Plaintiff argues that “Portamix intended to sell its products in the U.S.A. because it

entered into [the Agreement] with Unitec for that express purpose” and that the “Agreement

shows that Portamix understood its products could be marketed and shipped throughout the

U.S.A.” (ECF No. 24 at 6.) Plaintiff further points to Section 5 of the Agreement which

provides that:

[T]he Supplier reserves the right to have the sole control and complete

authority to conduct, defend or complete settlement of the action and

all negotiations for its settlement or compromise so long as such control

and authority does not conflict with or violate any term or condition of

Distributor’s insurance policies. If required by Distributor’s insurance,

the Distributor’s insurer, not Supplier, shall have the right to control and

authority to conduct, defend and settle the action.

(Id. at 7 (citing ECF No. 24-3 at 6).) Plaintiff argues that this provision demonstrates that

Portamix intended for Unitec to sell its products throughout the United States, knew that

Unitec could be sued for distributing its products, and was willing to step into the forum

jurisdiction and direct the defense of any such litigation. (Id.) This argument misses the mark,

however, given that the Supreme Court has made clear that “it is the defendant’s actions, not

his expectations, that empower a State's courts to subject him to judgment.” Nicastro, 564 U.S.

at 883.

As argued by Portamix, and acknowledged by Plaintiff, Portamix maintained no offices,

operations, bank accounts, or employees in North Carolina and was never registered to do

business in the state. (ECF No. 21 at 11.) In addition according to the affidavit of Miles

Suckley, the Chief Executive of Portamix, the company: (1) does not directly sell, market, or

distribute its products in North Carolina; (2) its representatives have never visited North

Carolina for the purposes of conducting any business activity; and (3) has never retained a

sales representative for North Carolina. (Id. at 2.)

Nevertheless, it appears Plaintiff relies on its allegation that Unitec acted as an agent of

Portamix. (ECF No. 6 ¶ 19.) Plaintiff asserts that Portamix knew that, to accomplish its sales

goals, Unitec would be selling its products in the United States, and it was specifically directing

Unitec to sell its products throughout those states. (ECF No. 24 at 7.) However, Plaintiff fails

to allege or argue that Portamix itself targeted its business at North Carolina. Further, review

of the provision of the Agreement that Plaintiff cites in support of his contention that

Portamix directed Unitec to sell its machines actually provides that the Portamix would refer

any sales inquiry that it received to the corresponding territory distributor, not that it directed

the territorial distributor to sell any potential end machine when it received an inquiry. (See

ECF No. 24-3 at 3.)

Even accepting Plaintiff’s allegations that Unitec acted as an agent of Portamix as true,

such allegations do not support Plaintiff’s assertion that Portamix purposefully availed itself

of doing business in North Carolina. Unitec is a Connecticut corporation and has no principle

place of business, offices, or operations in North Carolina, and the machine at issue did not

make it to North Carolina through any intentional conduct directed to North Carolina by

Portamix. Rather, it appears that it was the activity between Niagra, a Pennsylvania

corporation with a satellite in Charlotte, and Plaintiff’s employer that resulted in the machine

being in the state. (ECF No. 6 ¶¶ 16–20.)

The Court concludes as a matter of law that Plaintiff has failed to establish by a prima

facie showing, or otherwise, that Portamix had purposely availed itself of doing business in

North Carolina which would allow this Court to exercise personal jurisdiction over Portamix.

Moreover, Plaintiff has likewise failed to allege sufficient facts in its Amended Complaint

which accepted as true demonstrates that this Court has personal jurisdiction over Portamix.

For the reasons outlined herein, the Court enters the following:

ORDER

IT IS THEREFORE ORDERED that Defendant Portamix’s Motion to Dismiss,

(ECF No. 20), is GRANTED and Portamix is dismissed from this action.

IT IS FURTHER ORDERED that the Clerk of Court shall terminate Portamix as

a Defendant in this action.

This, the 22nd day of April 2021.

/s/ Loretta C. Biggs

United States District Judge