Opposition Brief — Dikar, S. Coop. LTDA v. United States District Court for the Eastern District of Kentucky

egestas

Supreme Court. U.S

, sk & D

No. 97-1888 JUN 18 1998

Pb EETS 2. meenee CLERK we

SUPREME COURT OF THE UNITED STATES

October Term, 1997

Petitioner,

DIKAR, 8S. COOP. LTDA, - - - -

versus

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

KENTUCKY (MATTHEW HAYMAKER,

REAL PARTY ININTEREST) - - Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Sixth Circuit

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

PETER PERLMAN

PETER PERLMAN LAW OFFICES, P.S.C.

388 South Broadway

Lexington, Kentucky 40508

(606) 253-3919

Attorney for Respondent

June 17, 1998

WESTERFIELD- BONTE CO., 619 W. KENTUCKY-—P.O. BOX 3251, LOUISVILLE, KY

pgs Smale

i

QUESTION PRESENTED

Whether a defendant, whose motion to dismiss for lack

of jurisdiction has been denied with leave to renew, may

refuse the District Court’s direction to provide full discov-

ery to the plaintiff.

il

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED .................ccceceecceeeeeeee- i

TABLE OF AUTHORITIES ...............0c2e.cecsceeeceeeee ii

CI A ii ie iv

STATEMENT OF THE CASE ................ccccce00000-- 1

I. Factual Background ..........................2..00000- 1 |

Il. Procedural Background ................0...00000+- 2 |

I iceciiniitiiiicdiiittie i 4

A. Dikar Is Not Entitled to Mandamus

BecauseThe District Court Has Ruled

on Personal Jurisdiction ........................... 4

B. Requirements of Mandamus Have Not

Been Shown in Any Case .......................00+ 6

SIT cciniiessninentetinciiitsipliliideaid aici baci deeds 9

Fg | RE aren an Us in Sleeee Pica TNT la—20a

Se

iil

TABLE OF AUTHORITIES

—_—_———

Cases:

Chrysler Corp. v. Fedders Corp., 643 F.2d 1229,

1240 (6 Cir 1981), cert. denied, 454 U.S. 893

RRR AER Cato nee oes ee

City of Cleveland v. Krupansky, 619 F.2d 572,

575 (6* Cir.) cert. denied, 449 U.S. 834

REGIE AERTS SRS ap A

In re American President Lines, Ltd., 929 F.2d

pee ae oe ee Pe)

In re Post-Newsweek Stations, 722 F.2d 325, 329

I a

International Technologies Consultants, Inc. v.

Euroglas S.A., 107 F.3d 386, 391 (6% Cir.

cog eS STM TSE es ent a

Nationwide Mutual Ins. Co. v. Tryg International

Ins. Co., 91 F.3d 790, 793 (6% Cir. 1996) .........

Societe Nationale Industrielle Aerospatiale v.

U.S. District Court for the Southern District

of Iowa, 482 U.S. 522, 542 (1987) ......ccccccccscecees

Theunissen v. Matthews, 935 F.2d 1454, 1465

> od SAREE RN

Warden, Kentucky State Penitentiary v. Gall, 865

F.2d 786, 788-9 (6% Cir. 1989) ........ccccseessseeees

Treatises:

8 Wright & Miller, Federal Practice and

Procedure §2040 p.521 (1994) oo... ccccccccccccccceccees

PAGE

~]

or

iv

ORDERS BELOW

The order of the court of appeals, which is unreported,

is reprinted at App. la. The court of appeals’ denial of the

petition for rehearing and suggestion for rehearing en banc

is also unreported and is reprinted at App. 3a. The rel-

evant orders of the district court, all of which are unre-

ported, are reprinted at App. 4a-8a.

No. 97-1888

SUPREME COURT OF THE UNITED STATES

October Term, 1997

DIKAR, S. AA eee, ee Petitioner,

versus

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

KENTUCKY (MATTHEW HAYMAKER,

REALPARTYININTEREST) - - ~- Respondent.

ON PETITION FoR Writ oF CERTIORARI TO THE

Unrtrep States Court or APPEALS FOR THE Srxtu Circurr

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

STATEMENT OF THE CASE

I. Factual Background

On September 26, 1996, Matt Haymaker purchased a

muzzle-loading rifle from the Richmond, Kentucky, Wal-

Mart store. The rifle was a Connecticut Valley Arms (here-

after “CVA”) .50-caliber “Buckmaster” inline muzzle-load-

ing rifle, which cost $214.96. It was a birthday gift from

his parents. At the time, Matt was 22 years old and a

student at Eastern Kentucky University.

2

On October 1, 1996, Matt was firing the rifle for the

first time. He was accompanied by a friend to a target

range, and they alternated shots while setting the sights

on the rifle. On approximately the ninth shot, the rear

end of the gun barrel exploded in Matt’s face, and he suf-

fered catastrophic injuries. He was treated at the U.K.

Medical Center for a ruptured globe of the right eye with

corneoscleral laceration, facial lacerations, and orbital and

maxillary sinus fractures.

Matt has suffered severe permanent damages includ-

ing the loss of his right eye.

II. Procedural Background

On December 27, 1996, a lawsuit was filed against CVA

and Wal-Mart Stores, Inc., in the Scott Circuit Court. On

January 28, 1997, the Defendants removed the case to the

U.S. District Court for the Eastern District of Kentucky.

Defendant CVA served its answers to Plaintiffs inter-

rogatories in which it stated that it was not the manufac-

turer of the “muzzle-loader” in question. Since it was not

the manufacturer, CVA took the position that it was not

required to produce blueprints, diagrams, or any testing

documents.

On March 19, 1997, the Plaintiff moved to file an

Amended Complaint adding two additional defendants, in-

cluding (a) Dikar, S. Coop. LTDA., Bergara, Spain (manu-

facturer of the rifle); and (b) Gene Sears Supply Co., El

Reno, Oklahoma (supplier of the rifle to Wal-Mart).

On July 30, 1997, Defendant Dikar filed its Motion to

Dismiss the Amended Complaint on the ground that the

district court lacked personal jurisdiction. Attached to this

motion was an affidavit of a Dikar executive. As another

attachment to its motion, Dikar submitted a bill of lading

indicating that Matt’s Buckmaster rifle was one of a ship-

ment of 398 identical rifles, along with 3,175 other rifles,

sent to CVA in the United States.

Se NEN Le MORO es ORT ree eT es

3

At the time of this motion, only one deposition had

been taken by any party in this case. This was a deposi-

tion of Neill Stevens, Vice President of a claims adjusting -

service retained by CVA. In the course of his deposition,

Mr. Stevens disclosed thirteen other incidents which in-

volved various similarities, including:

1. All involved a new or nearly new .50 caliber inline

muzzle-loading rifle sold by CVA and manufactured by

Dikar;

2. All involved barrel explosions, many involved seri-

ous eye damage, and they occurred between September

and December 1996;

3. Four of these other incidents occurred in Kentucky,

three in Ohio, two in Virginia, two in Tennessee, one in

Louisiana, and one in Michigan.

Plaintiff responded to the motion to dismiss on the mer-

its, citing the relevant law and the evidence as it was

known at that time (App. 9a).

On August 19, 1997, the district court denied Dikar’s

motion for dismissal on jurisdictional grounds, saying that

Dikar could renew its motion following the completion of

“all discovery” (App. 4a).

On August 26, 1997, Dikar filed its Motion for Modifi-

cation of the August 19 Order, asking the district court to

expressly limit discovery to jurisdictional issues. Dikar

also asked for leave to take an interlocutory appeal of the

earlier Order.

On September 11, 1997, Plaintiff served his Response

to Dikar’s Motion to Limit Discovery, pointing out the inef-

ficiency of splitting the discovery, the discretionary nature

of the district court’s ruling on scope of discovery, and the

ultimate need for all the discovery from Dikar as part of

Plaintiff's case against the other parties.

On October 8, 1997, the district court entered an Order

specifically denying Dikar’s motion for modification and

- 4

specifically reaffirming its earlier Order “granting open

discovery as opposed to limited discovery pertaining only

to the personal jurisdiction issue.” The Order also refused

to certify the issue for an interlocutory appeal (App. 5a).

On December 17, 1997, the district court granted

Plaintiffs motion to depose representatives of Dikar in

Spain, pursuant to the Federal Rules of Civil Procedure

(App. 7a). The order further provided that *. . . deponents’

responses in said depositions SHALL NOT be limited to

questions concerning only jurisdictional issues... .”

ARGUMENT

A. Dikar is Not Entitled to Mandamus Because

The District Court Has Ruled on Personal

Jurisdiction

Dikar’s entire factual premise for its Petition for Man-

damus is incorrect, since the district court has properly

ruled on and denied Dikar’s motion to dismiss for lack of

personal jurisdiction. Dikar has suggested to this Court

that Plaintiffs only response to Dikar’s motion to dismiss

was that it was premature. This is incorrect. Plaintiffs

Response of August 15, 1997, cited the applicable law and

the available discovery (App. 9a).

Plaintiffs response cited Sixth Circuit decisions as to

personal jurisdiction under the Due Process Clause. Then

Plaintiff argued that Dikar had met the requirements of

personal jurisdiction, since it had manufactured hundreds

of firearms for an American distributor, CVA, with the

intention (according to Dikar’s own affidavit) that they be

sold and used in the United States. Plaintiff recited the

proof (in Dikar’s affidavit) tnat Dikar did not limit the

states in which CVA could distribute the rifles. Plaintiff

pointed out that CVA is the only company that distributes

Dikar’s sporting guns in the U.S. (once again from Dikar’s

affidavit) and that it received substantial profits from their

5

sale in Kentucky, as well as other states. Plaintiff argued

the merits of the requirements of (a) purposeful availment,

(b) actions in Kentucky, and (c) reasonableness of the exer-

cise of jurisdiction.

The proof, even at that time, showed that the motion

should be denied on the merits. This is what the district

court has clearly done. The district court’s order of August

19 states that the motion to dismiss was “denied.” It was

not held in abeyance. The district court did not rule that

the motion was premature. The court simply decided the

issue before it. The district court had more than enough

evidence on which to conclude that Dikar’s motion to dis-

miss was without merit. In the absence of an evidentiary

hearing, it is the district court’s duty to consider all proof

on such a motion in the light most favorable to the plain-

tiff, Nationwide Mutual Ins. Co. v. Tryg International Ins.

Co., 91 F.3d 790, 793 (6% Cir. 1996), and the plaintiff need

only make a prima facie showing of personal jurisdiction,

International Technologies Consultants, Inc. v. Euroglas

S.A., 107 F.3d 386, 391 (6% Cir. 1997).

The district court’s ruling on the issue was further em-

phasized on October 8, when the Court reaffirmed its Or-

der and denied Dikar’s motion to specifically limit discov-

ery to jurisdictional issues. Once again, the district court

did not hold that the issue was in abeyance or was prema-

ture; instead, it denied the motion.

In short, Dikar has failed to show that it is clearly

entitled to relief, since it cannot even demonstrate the ba-

sic factual premise of its motion. The pleadings, proof and

orders demonstrate that the district court has ruled on

Dikar’s motion. Discovery on all issues should now pro-

ceed under the Federal Rules of Civil Procedure. Societe

Nationale Industrielle Aerospatiale v. U.S. District Court

for the Southern District of Iowa, 482 U.S. 522, 542 (1987).

6

B. The Requirements of Mandamus Have Not

Been Shown in This Case

Even if Dikar were correct, and the district court had

not yet decided the motion to dismiss for lack of personal

jurisdiction, Dikar would not be entitled to mandamus.

As the cases cited by the court of appeals panel pointed

out, in denying Dikar’s mandamus petition, mandamus is

not available to contro] the district court in the exercise of

its discretionary duties. In re American President Lines,

. Ltd., 929 F.2d 296, 227 (6" Cir. 1991); In re Post-Newsweek

Stations, 722 F.2d 325, 329 (6* Cir. 1983). Here, the rul-

ing of the district court to which Dikar objects is its order

that the discovery methods under the Federal Rules of

Civil Procedure may be used to take discovery from the

Spanish manufacturer, both as to jurisdiction and as to

the merits of this products liability case. This matter is

part of the Court’s discretion in balancing the needs and

rights of the parties in pre-trial discovery activity. The

scope of discovery is within the Court’s discretion. Chrysler

Corp. v. Fedders Corp., 643 F.2d 1229, 1240 (6" Cir 1981),

cert. denied, 454 U.S. 893 (1981); Theunissen v. Matthews,

935 F.2d 1454, 1465 (6" Cir. 1991). A District Court need

not limit discovery to jurisdictional questions. The Court’s

discretion to limit discovery is discussed in 8 Wright &

Miller, Federal Practice and Procedure §2040 p.521 (1994):

Ever since the days of the former equity bill for dis-

covery there has been applied to discovery “the prin-

ciple of judicial parsimony,” by which, when one issue

may be determinative of a case, the court has discre-

tion to stay discovery on other issues until the critical

issue has been decided. In accordance with this prin-

ciple — a salutary principle if it is applied sparingly

and with real discretion rather than as an absolute

rule — a court may decide that in a particular case it

would be wise to stay discovery on the merits until

me

7

challenges to jurisdiction have been resolved. [Em-

phasis added.]}

This discretionary decision of the district court should

not be disrupted by piecemeal appeals such as this one.

The panel’s cited cases also make it clear that manda-

mus is generally not available to review discovery orders.

Warden, Kentucky State Penitentiary v. Gall, 865 F.2d 786,

788-9 (6" Cir. 1989); City of Cleveland v. Krupansky, 619

F.2d 572, 575 (6% Cir.) cert. denied, 449 U.S. 834 (1980).

There is a recognized exception where discovery raises ques-

tions of unusual importance necessary to the economical

and efficient administration of justice. Here, all those con-

siderations of economy and efficiency all support the dis-

trict court’s ruling.

In its Petition, Dikar concedes that it is proper to use

the federal discovery rules to address the issue of jurisdic-

tion. However, it objects to Plaintiff asking, in the same

discovery procedure, whether it be a deposition or inter-

rogatories or requests for documents, other questions con-

cerning the exploding rifle. These matters would include

the rifle’s blueprints, design, material specifications, test-

ing, and the like. For the sake of economy and efficiency,

this should be done at the same time Plaintiff's counsel are

in Spain questioning Dikar’s representatives as to its con-

tacts with other Defendants, contacts with other entities

in the United States, a study prepared for Dikar discuss-

ing the United States market for muzzle-loading rifles (pro-

duced in discovery), and other efforts to market its rifles in

this country.

The logistics of a single trip to Spain for depositions of

knowledgeable Dikar representatives will be expensive and

time-consuming. To force Matt Haymaker to engage in

two such trips is to unfairly punish him, since he can less

easily afford these expenses than an insurer or the corpo-

rate defendants. This burden is unreasonable for this plain-

8

tiff and for those plaintiffs in the many other injury inci-

dents which have been identified.

It would be a massive waste of judicial resources, and

an intimidating doubling of a plaintiffs expenses and ef-

fort, to permit every case where lack of jurisdiction is pled

to include:

(1) adiscovery stage for jurisdiction,

(2) a hearing stage for jurisdiction,

(3) an appellate stage for jurisdiction, followed by

(4) adiscovery stage on the merits, then

(5) atrial stage on the merits, and then

(6) an appellate stage on every other matter not

raised earlier.

Yet this is exactly what Dikar seeks. It should not be

permitted, under the principle of F.R.C.P. 1, which directs

that the rules “. . . shall be construed and administered to

secure the just, speedy, and inexpensive determination of

every action.”

The real motives of Dikar are delay and denial of dis-

covery to the Plaintiff. In discovery responses, Dikar has

asserted the joint defense privilege, based on its coopera-

tion with Defendant Connecticut Valley Arms. The delay

is designed to impede the Plaintiffs access to discovery

which is critical to the case against both Defendants. This

includes the basic design, materials specifications, and test-

ing for the rifle. On all of these issues, the U.S. distributor

CVA claims ignorance. Delay and denial prevent this case

from going forward, and delays all the other cases against

CVA and Dikar as well.

|

9

CONCLUSION

This Court should deny the Petition for Certiorari filed

by the Petitioner Dikar, S. Coop. LTDA.

June 17, 1998

Respectfully submitted,

PETER PERLMAN

PrTeR PERLMAN Law Orricss, P.S.C.

388 South Broadway

Lexington, Kentucky 40508

(606) 253-3919

Attorney for Respondent

APPENDIX

AF hh el?

i i a le ET ak eT

:

:

;

:

:

:

<J

Appendix A—Court of Appeals’ Order, denying

mandamus, filed February 11, 1998 .00.........0...0.0..

Appendix B—Court of Appeals’ Order, denying

rehearing, filed April 23, 1998 .0...........ccccceescesseees

Appendix C—District Court’s Order filed August

[ESRI Seid EE eae tea oe eee OPT

Appendix D—District Court’s Order filed October

BP EERO LAE Nic a et aC er ae a

Appendix E—District Court’s Order filed

I

Appendix F—Plaintiff's Response to Dikar’s

Motion To Dismiss and Plaintiff's Motion for

Leave to Take Additional Discovery, filed

I I I cent

la

3a

4a

5a

7a

9a

la

APPENDIX A

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 98-5001

In re: DIKAR, S. COOP. LTDA, - - _ Petitioner,

ORDER—Filed February 11, 1998

Before: CONTIE, NORRIS, and CLAY, Circuit Judges.

The petitioner, a foreign defendant in this products li-

ability action, seeks a writ of mandamus directing that

discovery in this action be limited to personal jurisdiction

issues until after the district court determines whether it

can exercise personal jurisdiction over the petitioner. “The

remedy of mandamus is a drastic one, to be invoked only

in extraordinary situations where the petitioner can show

a clear and indisputable right to the relief sought. It can-

not be used to control a district court in the exercise of

discretionary duties.” In re American President Lines, Ltd.,

929 F.2d 226, 227 (6th Cir. 1991) (order) (citations omit-

ted); see In re Post-Newsweek Stations, 722 F.2d.325, 329

(6th Cir. 1983).

Generally, mandamus is not available to review discov-

ery orders. See Warden, Kentucky State Penitentiary v.

Gall, 865 F.2d 786, 788-89 (6th Cir. 1989); City of Cleve-

land v. Krupansky, 619 F.2d 572, 575 (6th Cir.) (per cu-

riam). cert. denied, 449 U.S. 834 (1980). In limited circum-

stances, however, mandamus is available to review pre-

trial discovery rulings. Where a discovery ruling raises

“questions of unusual importance necessary to the economi-

cal and efficient administration of justice,” it may be re-

viewed in mandamus. FDIC v. Ernst & Whinney, 921 F.2d

83, 85 (6th Cir. 1990) (quoting EEOC v. K-Mart Corp., 694

F.2d 1055, 1060 (6th Cir. 1982)).

We will not exercise our authority in mandamus to

intervene in the district court's management of pretrial

discovery in this case. The petitioner has not clearly dem-

onstrated that the district court’s orders permitting discov-

ery under the Federal Rules of Civil Procedure are errone-

ous as matter of law. See Societe Nationale Industrielle

Aerospariale v. United Stares District Court of the South-

ern District of Iowa, 482 U.S. 522, 541 (1987) (holding that

the Hague Convention procedures for taking evidence

abroad are not exclusive or mandatory).

It therefore is ORDERED that the petition for a writ of

mandamus is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Clerk

3a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 98-5001

IN RE: DIKAR,S.COOP.LTDA, - - ~- Petitioner.

ORDER—Filed April 23, 1998

Before: CONTIE, NORRIS, and CLAY, Circuit Judges.

The court having received a petition for rehearing en

banc, and the petition having been circulated not only to

the original panel members but aiso to all other active

judges of this court, and no judge of this court having

requested a vote on the suggestion for rehearing en banc,

the petition for rehearing has been referred to the original

panel.

The panel has further reviewed the petition for rehear-

ing and concludes that the issues raised in the petition

were fully considered upon the original submission and

decision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

4a

APPENDIX C

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON DIVISION

Civil Action No. 97-28

MATTHEW HAYMAKER - - - - -_ Plaintiff

versus

CONNECTICUT VALLEY ARMS; AND

WAL-MART STORES, INC. - - -_ - Defendants

ORDER—Filed August 19, 1997

The Defendant Dikar, S. Coop. LTDA having moved to

dismiss the Complaint against it, on the ground of lack of

personal jurisdiction, the Plaintiff having responded, and

the Court being sufficiently advised,

IT IS HEREBY ORDERED that the motion to dismiss

is DENIED.

IT IS FURTHER ORDERED that the Plaintiff's mo-

tion for leave to conduct additional discovery is ~"RANTED

Following the completion of all discovery, the Defendant

Dikar may renew any dispositive motion concerning juris-

dictional issues.

This 19th day of August, 1997.

/s/_ Karl S. Forester

Judge, U.S. District Court

Copies to Counsel

5a

APPENDIX D

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON -

Civil Action No. 97-028

MATTHEW HAYMAKER, - - - - _ Plaintiff,

versus

CONNECTICUT VALLEY ARMS,

WAL-MART STORES, INC.,

DIKAR, S. COOP LTDA, and

GENE SEARS SUPPLY COMPANY, - - _ Defendant.

ORDER —Filed October 8, 1997

This matter is before the Court upon the Motion of the

defendant, Dikar, S. Coop LTDA (“Dikar”) for modification

of the Orders this Court entered on August 5 and 19, 1997,

to wit, the Order for Meeting and Report and the Order

granting open discovery as opposed to limited discovery

pertaining only to the personal jurisdiction issue. More-

over, Dikar requests that if this Court denies its Motion to

Modify said Orders, that the Court certify the issue pursu-

ant to 28 U.S.C. § 1292(b) for appellate review and stay

the respective orders pending resolution of the appeal. The

Court, having read the parties’ briefs and remaining confi-

dent in its previous ruling and being otherwise fully and

sufficiently advised, HEREBY ORDERS THAT

DEFENDANT’S MOTION TO MODIFY SAID ORDERS

[docket entry 28] IS DENIED. FURTHER, THIS ISSUE

SHALL NOT BE CERTIFIED FOR APPEAL.

6a

This 8th day of October, 1997.

/s/_ KarlS. Forester

Kar] S. Forester, Judge

7a

APPENDIX E

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON

Civil Action No. 97-028

MATTHEW HAYMAKER, - - - - -_ Plaintiff,

versus

CONNECTICUT VALLEY ARMS,

WAL-MART STORES, INC.,

DIKAR S. COOP. LTDA, and

GENESEARSSUPPLYCO., - - - - Defendants.

ORDER—Filed December 17, 1997

This matter is before the Court upon the motion of the

plaintiff, Matthew Haymaker, to conduct the depositions

of representatives of Dikar, S. Coop. LTDA (“Dikar”), set

to be taken in Spain. in the above-styled action pursuant

to the Federal Rules of Civil Procedure [docket entry 54],

and upon plaintiffs motion to co mpel defendant Dikar, S.

Coop. LTDA, to answer plaintiffs discovery requests and

for sanctions [docket entry 55], Defendant filed its response

to the same on December 8, 1997 [docket entry 61], to

which plaintiff filed his reply on December 10,1997 [docket

entry 63]. Accordingly, all matters are ripe for review.

The Court, being Otherwise hilly and sufficiently ad-

vised, hereby ORDERS THAT:

1) the motion of the plaintiff to conduct the deposi-

tions of representatives of Dikar, set to be taken

in Spain, in the ab ove-styled action pursuant to

8a

the Federal Rules of Civil Procedure [docket entry

54], IS GRANTED:

2) deponents’ responses in said depositions SHALL

NOT be limited to questions concerning only juris-

dictional issues;

3) the motion of the plaintiff to compel defendant

Dikar to answer plaintiffs dis covery requests

which are not related to jurisdictional issues, as

the Court had specifically ruled that discovery is

to be wide-open and not limited to jurisdictional

issues, [docket entry 55) IS GRANTED TO THE

EXTENT THAT DEFENDANT'S ONLY OBJEC-

TION TO SUCH REQUESTS ARE THAT tHEY

EXCEED THE SCOPE OF JURISDICTIONAL IS-

SUES; and

4) the motion of the plaintiff for sanctions pursuant

to Fed.R.Civ.P. 37(b\(2) for defendant’s failure to

answer plaintiffs discovery requests in violation

of this Court’s orders [docket entry 55] IS PASSED

UNTIL THE COMPLETION OF TRIAL.

This 17th day of December, 1997.

/s/ Karl S. Forester

Karl S. Forester, Judge

9a

APPENDIX F

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON DIVISION

Civil Action No. 97-28

MATTHEW HAYMAKER - - - - -_ Plaintiff

versus

CONNECTICUT VALLEY ARMS,

WAL-MART STORES, INC..,

DIKAR S. COOP. LTDA, and

GENE SEARS SUPPLYCO. - - - ~- _ Defendants

PLAINTIFF’S RESPONSE TO DIKAR’S MOTION

TO DISMISS AND PLAINTIFF’S MOTION FOR

LEAVE TO TAKE ADDITIONAL DISCOVERY

—Filed August 15, 1997

I. INTRODUCTION

Defendant Dikar, S. Coop. LTDA. (hereafter “Dikar”)

has filed its Motion to Dismiss Plaintiffs Amended Com-

plaint, supported by affidavits. Plaintiff would show to the

Court that the motion should not be granted for two rea-

sons:

i. The facts, even as recited by Dikar, do not entitle it

to be dismissed based on lack of personal jurisdic-

tion; and

ii. The motion is premature, since Plaintiff has had no

opportunity to conduct discovery concerning the ju-

risdictional issues, from Dikar or other defendants

with knowledge.

10a

A. SUMMARY OF FACTS

On September 26, 1996, Matt Haymaker purchased a

muzzle loading rifle from the Richmond, Kentucky, Wal-

Mart store. The rifle was a Connecticut Valley Arms (here-

after “CVA”) .50-caliber “Buckmaster” inline muzzle-load-

ing rifle, which cost $214.96. It was a birthday gift from

his parents. At the time, Matt was 22 years old and a

student at Eastern Kentucky University.

On October 1, 1996, Matt was firing the rifle for the

first time. He was accompanied by a friend to a target

range, and they alternated shots while setting the sights

on the rifle. On approximately the ninth shot, the rear

end of the gun barrel exploded in Matt’s face, and he suf-

fered catastrophic injuries. He was treated at the U.K.

Medical Center. The operative report describes the follow-

ing injuries:

1. Ruptured globe of the right eye with corneoscleral

laceration;

2. Facial lacerations;

3. Orbital and maxillary sinus fractures.

Matt has suffered severe permanent damages includ-

ing the loss of sight in his right eye.

An illustration of the rifle is attached as Exhibit “A.”

B. SUMMARY OF THE LITIGATION

On December 27, 1996, a lawsuit was filed against CVA

and Wal-Mart in the Scott Circuit Court. On January 28,

1997, the Defendants removed the case to the U.S. District

Court, Eastern District of Kentucky.

On February 13, 1997, the Court ordered counsel for

the parties to conduct a meeting as required by Rule 26(f)

and to file a written Joint Report no later than March 24,

1997.

In the meantime, CVA served its Answer to Plaintiff's

Interrogatories in which it stated that it was not the manu.

facturer of the “muzzle loader” in question. Since it was

not the manufacturer, CVA took the position that it was

lla

not required to produce blueprints, diagrams, or any test-

ing documents.

On March 19, 1997, Plaintiff moved to file an Amended

Complaint adding the following additional parties:

1. Dikar, S. Coop. LTDA., Urarte Kalea 26, Poligono

Industrial San Lorenzo, 20570 Bergara, Spain;

manufacturer of the rifle.

2. Gene Sears Supply Co., P.O. Box 38, El] Reno, Okla-

homa 73036; supplier of the rifle to Wal-Mart.

The information pertaining to the manufacturer and

supplier was provided by counsel for the other Defendants

by letter of March 10, 1997. See ibit “B.”

On March 18, 1997, counsel for Plaintiff and counsel

for CVA and Wal-Mart filed a “Joint Motion for Extension

of Time” to comply with FRCP 26(f). The basis for the

motion was the need to serve the additional Defendants,

one of which required service under the Hague Conven-

tion. This motion was sustained by the Court’s Order of

March 26, 1997.

On July 30, 1997, Defendant, Dikar filed its Motion to

Dismiss the Amended Complaint on the ground that the

Court lacks personal jurisdiction. Absolutely no discovery

has been taken from Dikar, or from the other parties con-

cerning their relationship with Dikar. On August 5, 1997,

the Court directed all parties to conduct a meeting pursu-

ant to Rule 26(f) and to file a written report no later than

September 15, 1997.

Only one deposition has been taken by any party in

this case. This was a deposition of Neill Stevens, Vice

President of a claims adjusting service retained by CVA.

A copy is attached as Exhibit “C.” Mr. Stevens was de-

posed by the Plaintiff on July 14, 1997, concerning his

knowledge of Matt Haymaker’s case and his knowledge of

other similar occurrences. In the course of his deposition,

Mr. Stevens disclosed thirteen other incidents which in-

volved the following similarities:

12a

i. They all involved a similar .50 caliber in-line

muzzle loading rifle;

2. They all involved rifles that were new or relatively

new;

3. They all involved barrel explosions which resulted

in injuries to the user, many involving serious eye

damage;

4. All of the other incidents occurred between Sep-

tember 1996 and December 1996;

5. Four of these other incidents occurred in Kentucky,

three in Ohio, two in Virginia, two in Tennessee,

one in Louisiana, and one in Michigan.

In Attachment 2 to its Motion, Dikar submitted a bill

of lading indicating that Matt’s Buckmaster rifle was one

of a shipment of 398 identical rifles, along with other rifles,

sent to CVA in the United States.

Il. ARGUMENTS

A. DISMISSAL OF DIKAR WOULD VIOLATE DUE

PROCESS, AND WOULD BE GROSSLY UNFAIR TO

THE PLAINTIFF

The pertinent long-arm statute is K.R.S. 454.210, which

permits the Court to exercise jurisdiction over Dikar so

long as the requirements of the Due Process Clause of the

Fourteenth Amendment of the United States Constitution

are satisfied.

In order to satisfy the requirements of the Due Process

Clause, the Sixth Circuit has established three elements

which must be met. Those include:

First, the defendant must purposely avail himself of

the privilege of acting in the forum state or causing a

consequence in the forum state. Second, the cause of

action must arise from the defendant’s activities there.

Finally, the acts of the defendant must have a sub-

stantial enough connection with the forum state to

make the exercise of jurisdiction over the defendant

reasonable.

4

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i3a

Kerry Steel, Inc. v. Paragon Industries, Inc., 106 F.3d 147,

150 (6" Cir. 1997) (quoting Southern Machinery Co.. v.

Mohasco Industries, Inc., 401 F.2d 374 (6% Cir. 1968)).

1. Dikar Purposely Availed Itself of Access to

Kentucky’s Markets

The first issue is whether or not Dikar purposely availed

itself of the privilege of acting in the forum state or caus-

ing a consequence in the forum state. In Poyner v. Erma

Werke GMBH et «]., 618 F.2d 1186 (6% Cir. 1990). cert.

denied, 449 U.S. 841 (1980), the Defendant, a German gun

manufacturer, utilized the services of an American based

distributor. The Sixth Circuit held that “The use of an

independent distributor so that the manufacturer is only

indirectly responsible for the product reaching an injured

consumer, in and of itself, will not insulate a non-resident

foreign corporation from suit.” Id. at 1190 (citing Everly

Aircraft Co. v. Killian, 414 F.2d 591 (5 Cir. 1969)).

There is a difference in the parties’ interpretation of

applicable cases. First, Dikar relies on World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) to ar-

gue that foreseeability of a product’s sale in a forum is not

enough, standing alone, to satisfy the purposeful availment

requirement. However, in - ’

this requirement of additional contact was met because

the defendant benefitted continually from what he knew to

be sales of his product by merchants in the forum state.

Likewise, Dikar placed this exploding rifle (and other ex-

ploding rifles) into the stream of commerce in this country,

without regard for the ultimate location of sale, and it

profited from the sales of this rifle and others like it in the

Commonwealth of Kentucky.

Dikar also relies on Asahi Metal Industry Co., Ltd. v.

Superior Court, 480 U.S. 102 (1987) for the proposition

that the placement of a product into the stream of com-

merce, without more, is not enough to satisfy this due

process. It should be pointed out that personal jurisdic-

tion over the defendant in Asahi was denied on other

l4a

grounds than purposeful availment. Id at 102. On that

non-dispositive issue, four members of the Court concluded

that jurisdiction premised on the placement of a product

into the stream of commerce, with knowledge of marketing

but without a showing of additional conduct, is consistent

with the Due Process Clause. Id. at 104. Plaintiff also

believes, and has asked leave to conduct discovery to show,

that there are additional jurisdictional contacts between

Dikar and the forum.

In addition, Dikar cites Halderman v. Sanderson Fork-

lifts Co., 818 S.W.2d 270, 274 (Ky. App. 1991) in support

of its argument that this purposeful availment element

has not been met. However, Halderman is easily distin-

guishable from the case at hand. The product in

Halderman, a Winget dumper, was sold in Ohio and was

never even distributed in Kentucky. “It was merely fortu-

itous that one Winget dumper ended up in Kentucky.” Id,

Here, it was not merely fortuitous that Matt Haymaker’s

exploding rifle ended up in Kentucky. The rifles were and

continue to be regularly sold in retail stores in Kentucky.

None of the remaining Sixth Circuit cases relied upon

by Dikar are products liability cases. That fact alone is

enough to distinguish those from the case at hand. Inter-

national Technologies Consultants, Inc. v. Euroglas S.A.,

107 F.3d 386 (6% Cir. 1997) involved conversion of intellec-

tual property and misappropriation of trade secrets. Conti

v. Pneumatic Products Corp., 977 F.2d 978 (6% Cir. 1992)

involved fraud and misrepresentation. Finally, Nation-

wide Mutual Ins. Co. v. Tryg International Ins. Co., 91

F.3d 790 (6" Cir. 1996); Kerry Steel, 106 F.3d 147; and

Market/Media Research Inc. y. Union Tribune Publishing

Co., 951 F.2d 102 (6% Cir, 1991), cert. denied, 506 U.S.

824 (1992) all involved a breach of contract.

The record reveals that Dikar manufactured hundreds

of firearms for an American distributor, CVA, with the

intention that the guns would be used in the U.S. and with

knowledge that they would be sold in retail outlets through-

out this country. Dikar placed no restrictions or limita-

ree iiaiiiiaemaiiill

15a

tions on CVA’s distribution. Moreover, CVA is the only

company that distributes Dikar manufactured sporting guns

in the U.S. Matt’s case is not an isolated occurrence, nor

did this rifle end up in Kentucky fortuitously. The sale of

this rifle, and others similar to it, arose from an effort to

serve the U.S. market, including Kentucky. Based upon

the foregoing, Dikar’s activities satisfy the necessary pur-

poseful availment requirement.

et eee '

This element requires that Matt’s claim have a sub-

stantial connection with Dikar’s in-state activities. Kerry

Steel, Inc., supra, 106 F.3d at 152; Southern Machinery

Co., supra, 401 F.2d 374. Plaintiff previously demon-

strated Dikar’s connection with Kentucky. Dikar’s sale of

hundreds of rifles to CVA with no restriction as to the

area where they were distributed in the U.S., coupled with

Dikar’s substantial profit on the sales of these rifles in

Kentucky, as well as the subsequent Kentucky explosion

of several rifles resulting in injuries, is sufficient to satisfy

this requirement. Matt’s claim, based on his injuries sus-

tained, is directly related to Dikar’s activity, the manufac-

ture of exploding rifles distributed and sold in Kentucky.

3. It Would be Reasonable for this Court to Exercise

P | testeslinions Ces Til

Finally, the question is whether or not the exercise of

jurisdiction over Dikar would be reasonable. In its brief,

Dikar pointed out that the Asahi plurality cautioned lower

courts to make “a careful inquiry into the reasonableness

of the assertion of jurisdiction in the particular case,” guided

by “an unwillingness to find the serious burdens on an

alien defendant outweighed by minimal interests on the

part of the plaintiff or the forum state.” 480 U.S. at 115.

This involves three inquiries.

The first inquiry is whether it is reasonable, from

Dikar’s perspective, to exercise jurisdiction over it. Dikar

should have anticipated being haled into court in Ken-

16a

tucky. Dikar manufactured hundreds of firearms for an

American distributor, CVA, with the intention that the

guns would be used in the U.S. and with knowledge that

they would be sold in retail outlets throughout the this

country. Dikar placed no restrictions on CVA’s distribu-

tion in the U.S. Moreover, CVA is the only company that

distributes Dikar manufactured sporting guns in the U.S.

This is not an isolated occurrence, nor did this rifle end up

in Kentucky fortuitously. The sale of this exploding rifle,

and others similar to it, arose from an effort to serve the

U.S. market, including Kentucky. Under these circum-

stances, it is unjust to permit Dikar to plead ignorance as

to where the guns were actually sold and escape the juris-

diction of this Court.

Second, the forum’s interest in adjudicating the dis-

pute is another factor to be considered. Asahi Metal In-

dustry Co., Lid., supra, 480 U.S. at 115; Poyner, supra,

618 F.2d at 1192. Claims based on injuries caused by

inherently dangerous products imported through indepen-

dent distributors fall within that class of litigation which

the forum state has a deep interest in adjudicating.

Poyner, supra, 618 F.2d at 1192. Kentucky’s interest in

adjudicating this dispute is heightened by the fact that

there are four other cases in Kentucky identical to the one

at hand. Additionally, Kentucky has a manifest interest

in protecting its residents from distant, possibly harassing

litigation, particularly when, as here, the injury took place

in Kentucky and the product was distributed and sold in

Kentucky.

Finally, the plaintiff's interest in obtaining convenient

and effective relief is a relevant factor to be considered in

determining the reasonableness of requiring a nonresi-

dent defendant to litigate a claim in the forum state. Asahi

Metal Industry Co., Litd., supra, 480 U.S. at 115; World-

Wide Volkswagen Corp, supra, 444 U.S. at 292. When a

foreign corporation such as Dikar places goods into the

stream of commerce for distribution throughout the U.S.

and it derives substantial revenue from the distribution of

i i i

17a

same, it is reasonable that claims emanating from injuries

caused by the defective product be litigated where the sale

occurred and the injured victim is found. Otherwise, the

other thirteen victims injured by these exploding rifles,

like Matt, would have no recourse to justice anywhere in

the United States. It is not as if the alternative forums

here are Ohio or New York or California; rather, there

would be no alternative U.S. forum. This is fundamentally

unfair and unjust.

It is clear that Matt Haymaker and the Commonwealth

of Kentucky, as well as the other injured victims in this

state, have a significant interest in having this dispute

litigated in Kentucky. Their interest substantially out-

weighs any burden which may be imposed on Dikar.

B.

RELATES TO THE JURISDICTIONAL ISSUE

It is clear that Dikar’s motion is in reality one for sum-

mary judgment, since it relies on the tendered affidavits of

Dikar representatives as to its activities in making, sell-

ing, advertising and marketing this and other firearms.

The “motion to dismiss” must therefore be decided under

the principles relating to summary judgments, found in

F.R.C.P. 56. One of these principles is that a party is not

entitled to summary judgment until the opposing party

has had a reasonable opportunity to discover the relevant

facts as to the issues in question. Vance v. U.S., 90 F.3d

1145, 1148 (6" Cir. 1996) (citing Whites Landing Fisher-

ies, Inc. v. Buchholzer, 29 F.3d 229, 231-232 (6* Cir. 1994))

held that:

If the non-movant makes a proposed timely showing

of a need for discovery, the district court’s entry of

summary judgment without permitting him to con-

duct any discovery at all will constitute an abuse of

discretion.

There has been no opportunity for discovery here, since

discovery must follow the initial meeting of the parties.

The Court has just issued its Order for the initial meeting

including the new parties Dikar and Gene Sears Supply

18a

Company, which must be held by September 5, 1997. Plain-

tiff must have an opportunity for reasonable discovery from

Dikar and from other parties, such as CVA, which had

dealings with Dikar or which have knowledge of Dikar’s

activities. Such discovery has not yet been done and could

not be done in the absence of Dikar as a party.

Plaintiff must have the right to discover, from both

Dikar and CVA, (a) the documents, including correspon-

dence and agreements, surrounding the sale of this rifle,

(b) the discussions between the parties, (c) the activities of

Dikar to market its products in the world market, includ-

ing its admitted intent that this rifle be used in the United

States, (d) the manner in which Dikar came to CVA’s at-

tention, (e) the nature of any exclusive rights by CVA to

market Dikar’s rifles in this country, and (f) Dikar’s knowl-

edge of the marketing and sales of this rifle in the U.S.

Plaintiff hereby moves for leave to conduct this addi-

tional critical discovery. This Court should grant Plaintiff's

motion for additional discovery and permit the discovery to

proceed before any motion for summary judgment pursu-

ant to F.R.C.P. 56 is considered. Dikar may wish to renew

its motion on jurisdictional grounds at the completion of

the discovery.

Ill. CONCLUSION

Dikar’s claim that this Court lacks jurisdiction would

completely frustrate the intent of the Kentucky Long Arm

Statute, and would leave Matt Haymaker without any prac-

tical resource against the maker of the exploding rifle which

mangled his face and eye. Such a decision would also be a

blow to the thirteen other consumers injured since Sep-

tember 1996, and to others injured in the future. Nothing

could be more unfair than for Dikar to make this exploding

rifle for sale in the U.S., to reap the profits from its sale as

intended in numerous states, and to avoid the consequences

when its rifles maim the consumers. In addition, Dikar

wants tc unfairly deprive the Plaintiff of any right to dis-

cover the facts to show that Dikar is subject to jurisdiction.

19a

Based upon the foregoing reasons, the “motion to dismiss”

filed by Dikar should be denied. Such dismissal would

preclude Dikar from being amenable to suit anywhere in

the United States.

In addition, the Court should grant Plaintiff's motion

to conduct discovery from Dikar as it relates to the juris-

dictional issue.

Respectfully submitted,

PETER PERLMAN LAW OFFICES, P.S.C.

388 SOUTH BROADWAY

LEXINGTON, KENTUCKY 40508

TELEPHONE: (606) 253-3919

/s/ Peter Perlman

ATTORNEY FOR PLAINTIFF

20a

CERTIFICATE OF SERVICE

This is to certify that a true and correct copy of the

foregoing has been served by mailing same on this 15“ day |

of August, 1997, to:

Charles E. Palmer, Jr., Esq.

Lynn C. Stidham, Esq.

STITES & HARBISON

Suite 2300

250 West Main St.

Lexington, KY 40507

ATTORNEYS FOR WAL-MART STORES, INC. And

CONNECTICUT VALLEY ARMS, INC.

V. Thomas Fryman, Jr., Esq.

Mark T. Hayden, Esq.

John K. Bush, Esq.

GREENEBAUM DOLL & McDONALD PLLC

1400 Vine Center Tower

333 West Vine Street

Lexington, KY 40507

ATTORNEYS FOR DIKAR, S. COOP. LTDA.

Kim M. Wilkie, Esq.

BOEHL, STOPHER & GRAVES

444 West Second St.

Lexington, KY 40507

ATTORNEY FOR GENE SEARS SUPPLY CO.

/s/_ Peter Perlman

ATTORNEY FOR PLAINTIFF

Pa Sas