United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER GRANTING IN PART AND
DENYING IN PART MOTIONS TO DISMISS
Parrish United States District Court Judge
the court are motions to dismiss filed by defendant Sekisui
SPR Americas, LLC (Sekisui Americas), [Docket 28]; defendant
Sekisui R i b Lo c Australia Pty Ltd. (Sekisui Australia),
[Docket 29]; and defendant HydraTech Engineered Products,
LLC, [Docket 35]. Two of the defendants-Sekisui Australia and
HydraTech-moved to dismiss for lack of personal jurisdiction.
The court concludes that plaintiff Salt Lake City Corporation
has made a prima facie showing that Sekisui Australia and
HydraTech are subject to personal jurisdiction in Utah and
DENIES both motions to the extent that they seek dismissal
for lack of jurisdiction.
of the defendants-Sekisui Americas, Sekisui Australia, and
HydraTech-moved to dismiss on statute of limitations grounds.
The court GRANTS all three motions to the extent that they
seek dismissal under the applicable statutes of limitations.
Lake City requested bids to rehabilitate a sewer line by
installing a liner within the existing sewer pipe. This
“trenchless” method of rehabilitating the sewer
line avoids the need to dig up and replace the line.
Pipeline and Trenchless Corporation won the bid. Either
Sekisui Americas or Sekisui Australia sold its proprietary liner
product to Southwest for use in the project. HydraTech
supplied joints that were used to connect and seal the
sections of pipe liner used in the project.
in late 2012, Southwest finished the sewer line
rehabilitation project. On December 17, 2012, Salt Lake City
sent a letter to Southwest. The letter stated that on
November 29, 2012, the city had tested the rehabilitated
section of sewer line and had discovered “a significant
defect and leak in the liner.” The letter stated that
the defect was “allowing 1.0 to 1.5 million gallons per
day . . . groundwater infiltration with extremely high total
dissolved solids . . . into the pipeline.” The letter
demanded that Southwest “correct the defective
work” by February 28, 2013. On October 1, 2015, the
city formally notified Southwest and either Sekisui Americas
or Sekisui Australia of a claim for breach of warranty.
10, 2017, Salt Lake City sued Southwest, Sekisui Americas,
Sekisui Australia, and HydraTech. The operative complaint
asserts claims for (1) breach of warranty, (2) products
liability, (3) negligence, and (4) negligent failure to warn
against Sekisui Americas, Sekisui Australia, and HydraTech.
Australia and HydraTech move to dismiss the claims against
them under Rule 12(b)(2) for lack of personal jurisdiction
and under Rule 12(b)(6) for failure to state a claim. Sekisui
Americas moves to dismiss only for a failure to state a claim
under Rule 12(b)(6). Under Tenth Circuit precedent, courts
must resolve challenges to personal jurisdiction before
addressing arguments related to the merits of the case.
OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149
F.3d 1086, 1090 (10th Cir. 1998). Thus, the court first
addresses Sekisui Australia and HydraTech's personal
jurisdiction arguments. The court then resolves the statute
of limitations arguments asserted under Rule 12(b)(6).
Facts Relevant to Personal Jurisdiction As the
plaintiff, Salt Lake City bears the burden of establishing
personal jurisdiction. Shrader v. Biddinger, 633
F.3d 1235, 1239 (10th Cir. 2011). When the issue of personal
jurisdiction “is raised early on in litigation, based
on pleadings (with attachments) and affidavits, that burden
can be met by a prima facie showing.”
Lake City proffers the affidavit of the president of
Southwest, Justin Duchaineau, in support of its prima
facie showing that this court has personal jurisdiction
over the defendants. Sekisui Australia and HydraTech also
present affidavits in support of their contentions that they
are not subject to personal jurisdiction in Utah. Some of the
affidavits presented by the defendants-in particular, the
affidavit of the acting managing director of Sekisui
Australia, Gloria Porcelli-aver facts that conflict with the
factual assertions made by the affidavit proffered by Salt
Lake City. For the purposes of determining whether Salt Lake
City has made its prima facie showing of
jurisdiction, the court must “resolve any factual
disputes in the plaintiff's favor.” Id.
Resolving all disputes in favor of Salt Lake City, the
affidavits support the following additional facts that are
relevant to the question of personal
November 2008, Southwest entered into a distributorship
agreement with Sekisui Australia, an Australian company that
manufactures liners used to refurbish underground pipes.
Sometime in 2009, either Sekisui Australia or its American
affiliate, Nordi Tube Technologies, Inc., informed Southwest
that Salt Lake City had requested bids to refurbish a sewer
line. Sekisui Australia asked Southwest to submit a bid for
the project using its liners. In support of the bid, Sekisui
Australia created design calculations tailored to the Salt
Lake City project that were then submitted to the city. The
Southwest bid was accepted by Salt Lake City. Sekisui
Australia subsequently manufactured pipe liner sections that
were specifically designed for the Salt Lake City project.
The chain of custody of the liner is not fully laid out in
the affidavits, but the liner sections were eventually
purchased from Sekisui Americas.
Australia, however, continued to be involved in the Salt Lake
City project. While Southwest was installing the liner, two
employees of Sekisui Australia-Andreas Vetter and an unnamed
individual-were regularly on the jobsite to train Southwest
employees and approve the installation work. Sekisui Australia
also sent a letter to Southwest that approved of
Southwest's proposal to use seals manufactured by
HydraTech to create a watertight seal between the liner
sections. The approval letter specifically referenced the
Salt Lake City project.
2011, HydraTech, a company located in Ohio, received an order
for a number of its joint seals. HydraTech shipped the seals
to Southwest in Salt Lake City. HydraTech also sent one of
its employees to Salt Lake City for two days to provide
on-site installation training.
determine whether it has personal jurisdiction over Sekisui
Australia and HydraTech, the court first looks to whether
exercising personal jurisdiction satisfies Utah's
long-arm statute, and second, whether exercising personal
jurisdiction comports with principles of constitutional due
process. See Soma Med. Int'l v. Standard Chartered
Bank, 196 F.3d 1292, 1295 (10th Cir. 1999). Utah's
long-arm statute “should be applied so as to assert
jurisdiction over nonresident defendants to the fullest
extent permitted by the due process clause of the Fourteenth
Amendment to the United States Constitution.” Utah Code
§ 78B-3-201(3). Therefore, the court need only address
whether the exercise of personal jurisdiction over the
defendants comports with due process demands.
Supreme Court has held that, to exercise jurisdiction in
harmony with due process, defendants must have ‘minimum
contacts' with the forum state, such that having to
defend a lawsuit there would not ‘offend traditional
notions of fair play and substantial justice.'”
Dudnikov v. Chalk & Vermillion Fine Arts, Inc.,
514 F.3d 1063, 1070 (10th Cir. 2008) (quoting Int'l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A
defendant's contacts with the forum state may give rise
to either general or specific personal jurisdiction. In this
case, Salt Lake City argues that Sekisui Australia and
HydraTech are subject to both general and specific personal
jurisdiction. The court first addresses the city's
specific jurisdiction argument.
jurisdiction is a two-step inquiry. The court must consider
“(a) whether the plaintiff has shown that the defendant
has minimum contacts with the forum state; and, if so, (b)
whether the defendant has presented a ‘compelling case
that the presence of some other considerations would render
jurisdiction unreasonable.'” Old Republic Ins.
Co. v. Continental Motors, Inc., 877 F.3d 895, 904 (10th
Cir. 2017) (quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 476-77 (1985)).
the court must consider whether a defendant has sufficient
contacts with the forum state. A defendant's contacts
with the forum state are sufficient when two requirements are
“the defendant purposefully directed its activities at
residents of the forum, ” and (2) “the
plaintiff's claim arises out of or results from the
actions by the defendant himself that create a substantial
connection with the forum state.” Pro Axess, Inc.
v. Orlux Distribution, Inc., 428 F.3d 1270, 1277 (10th
Cir. 2005) (citation omitted). Here, both requirements are
purposeful direction requirement “ensures that a
defendant will not be haled into a jurisdiction solely as a
result of random, fortuitous, or attenuated contacts, or of
the unilateral activity of another party or third
person.” Burger King, 471 U.S. at 475
(citations omitted). Instead, jurisdiction is proper
“where the contacts proximately result from actions by
the defendant himself that create a substantial
connection with the forum State.” Id.
(citation omitted). Consequently,
where the defendant deliberately has engaged in significant
activities within a State, or has created continuing
obligations between himself and residents of the forum, he
manifestly has availed himself of the privilege of conducting
business there, and because his activities are shielded by
the benefits and protections of the forum's laws it is
presumptively not unreasonable to require him to submit to
the burdens of litigation in that forum as well.
Id. at 475-76.
Sekisui Australia delivered its liner sections to a
third-party distributer, which then sold the product for use
in the Salt Lake City project, the court must conduct a
stream-of-commerce analysis to determine if Sekisui Australia
purposefully directed its activities toward Utah.
J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S.
873 (2011), the U.S. Supreme Court addressed the conditions
under which placing goods into the stream of commerce can
subject the manufacturer to specific personal jurisdiction in
the state where the goods end up. But the Court did not agree
on a majority opinion. “When a fragmented Court decides
a case and no single rationale explaining the result enjoys
the assent of five Justices, ‘the holding of the Court
may be viewed as that position taken by those Members who
concurred in the judgments on the narrowest grounds . . .
.'” Marks v. United States, 430 U.S. 188,
193 (1977) (alteration in original) (citation omitted).
opinion with the narrowest holding in McIntyre was
the concurring opinion of Justice Breyer, which
“adhere[d] strictly” to the Court's prior
precedents. McIntyre, 564 U.S. at 893. The Breyer
concurrence affirmed that a manufacturer may be subject to
personal jurisdiction in a state if it “delivered its
goods in the stream of commerce ‘with the expectation
that they will be purchased'” by end-users in that
state. Id. at 889 (quoting World -Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980)).
The concurrence concluded, however, that a mere expectation
that a good will arrive in a particular state by way of a
third-party distributor is not sufficient to establish
personal jurisdiction. Courts must also consider (1) whether
there was a “‘regular . . . flow' or
‘regular course' of sales” in the forum state
and (2) whether there was evidence that the manufacturer had
done “something more” to direct its product to
the forum state, “such as special state-related design,
advertising, advice, [or] marketing.” Id.
(citations omitted). Under the facts of McIntyre, a
foreign manufacturer that sold its product in the United
States through a third-party distributor did not have
sufficient contacts with the state of New Jersey to establish
personal jurisdiction where only one item was sold in the
state and where there was no indication that the manufacturer
had done something more to direct its product to the state.
Id. at 888-89.
case, Sekisui Australia placed its liners in the stream of
commerce and they were eventually sold by Sekisui Americas
for delivery and installation in Utah. Similar to the facts
of McIntyre, Salt Lake City has not produced
evidence of a course of sales in the state. The only evidence
before the court is of a single sale to the city. But unlike
in McIntyre, where there was no evidence that the
manufacturer had done anything to direct its product to the
forum state, Salt Lake City has made a strong showing that
Sekisui Americas specifically targeted it product toward
Utah. It encouraged Southwest to bid for the Salt Lake City
project using its liner. Sekisui Australia then created
design calculations for the Salt Lake City project to support
the bid and manufactured liner sections that were
specifically designed for the project. Two Sekisui Australia
employees visited the Salt Lake City project site to ensure
that the liner sections were installed correctly. Finally, it
authorized the use of HydraTech seals for the project.
Lake City, therefore, has proffered strong evidence that
Sekisui Australia specifically directed its product to Utah
through “special state-related design, . . . advice,
[and] marketing.” Id. at 889. This evidence
demonstrates that the liners did not arrive in Utah by
happenstance or by way of choices made by third parties.
Sekisui Australia identified the Salt Lake City project,
aided a contractor's bid so that its liners would be
purchased for the project, and manufactured liner sections
specifically for use in the project. Even after the liner
sections arrived in this state, Sekisui Australia continued
to be involved in the installation process by inspecting the
workmanship and authorizing the use of another company's
product to seal the liner sections. In short, Sekisui
Australia purposefully directed its activities toward Utah in
order to place its product here and continued its contacts
after its product arrived.
court concludes that even though there is no evidence of a
course of sales in Utah, Salt Lake City's strong showing
that Sekisui Australia specifically targeted its liners
toward the state is sufficient to show that it purposely
created a substantial connection with Utah. This evidence is
directly related to the core question of whether “the
defendant purposefully directed its activities at residents
of the forum.”See Pro Axess, 428 F.3d ...