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Litigation Alert: French Company, Having Sold Its Product Only in Europe, is Subject to Personal Jurisdiction in Illinois Products Liability Suit

Date: Apr 12, 2011

Following the death of his brother in a helicopter crash, John Russell brought suit against SNFA, the French company that had manufactured the bearings in the tail rotor of the helicopter. The case is Russell v. SNFA, No. 1-09-3012 (Ill. App. Ct. Sept. 25, 2009). On March 31st, the Circuit Court of Cook County held that the Illinois state courts could exercise jurisdiction over the French company, even though its tail rotor bearings had been sold, in Europe, to an Italian company.

The crash occurred when a tail rotor failed causing the helicopter, piloted by Russell's brother flying for an Illinois medical air service company, to spin out of control and crash. SNFA admitted that it had custom-made the tail-rotor bearings both originally in 1998, and again, in 2002, when the bearings were replaced. The bearings had been manufactured to the specifications of the helicopter manufacturer, Agusta, and SNFA admitted that it knew those custom-made tail-rotor bearings would be incorporated by Agusta into helicopters and also sold as individual replacement parts.

Nonetheless, SNFA asserted that it was not subject to personal jurisdiction in Illinois. The helicopter in question was owned by Metro Aviation, a Louisiana company, which had purchased the helicopter from a German company. SNFA had manufactured the replacement bearings in France and sold them to Agusta in Italy, which had sold them to its subsidiary, Agusta Aerospace Corporation (Agusta AC), which, in turn, had sold the bearings to Metro Aviation in Louisiana. SNFA argued that it had no United States customers for its helicopter bearings and had insufficient contacts with Illinois to be hailed into court there.

I. Illinois' Personal Jurisdiction Statute.

Illinois' personal jurisdiction statute (735 ILCS 5/2-209) provides for jurisdiction over a nonresident defendant via any one of three mechanisms: first, a defendant may be subject to specific jurisdiction as a consequence of an action within Illinois from which a cause of action arises; second, a defendant may be subject to general jurisdiction on any one of four grounds, two of which apply to corporations; or third, a defendant may be subject to personal jurisdiction under Illinois' "catchall provision" under which Illinois courts may exercise jurisdiction on any basis to the extent allowed by the due process clause of the Fourteenth Amendment to the United States Constitution.

The Circuit Court of Cook County, relying on facts not contested by SNFA, held that the defendant was subject to jurisdiction on the first and third grounds: that is, SNFA had sufficient contacts with Illinois to subject itself to specific personal jurisdiction there and the exercise of jurisdiction was consistent with the due process requirements of the United States Constitution. The court did not reach the question of whether SNFA was subject to general jurisdiction within the state.

II. SNFA Had Sufficient Minimum Contacts With Illinois to be Subject to Specific Personal Jurisdiction.

Specific personal jurisdiction exists, and a nonresident defendant may be hailed into the forum court, when that defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities. Even if sufficient minimum contacts exist, the exercise of personal jurisdiction must be reasonable. The Illinois Circuit Court held that SNFA had purposefully directed activities at Illinois sufficient to subject it to jurisdiction for litigation arising out of injuries caused by those activities and that the exercise of such jurisdiction would be reasonable.

The court differentiated Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), although it characterized the decision as the Supreme Court's most recent, relevant statement on minimum contacts. In Asahi, a case about indemnification, the Court was called upon to decide whether a Taiwanese tube manufacturer, sued in California after a plaintiff was injured in a motorcycle accident there, could pursue its indemnification claim against a Japanese manufacturer of the tube's valve assembly. Whether or not sufficient minimum contacts existed, a question that split the justices, the entire panel held that the exercise of jurisdiction in such a scenario would not be reasonable. The Court found no evidence that Asahi had designed its product in anticipation of sales in California and cited Rockwell International Corp. v. Costruzioni Aeronautiche Giovanni Agusta, S.P.A., 553 F.Supp. 328 (E.D. Pa. 1982) (mem. op.) as a case in which the opposite was true.

The defendant in Rockwell happened to be the same as the defendant before the Circuit Court in this case – SNFA – and the facts were almost identical; SNFA had custom-made bearings for a helicopter manufactured by Agusta, the bearings were replaced by ones also manufactured by the plaintiff; the helicopter crashed, allegedly as a result of the failure of the bearings and the drive shaft, and the plaintiff was killed. The Eastern District of Pennsylvania held that SNFA had established sufficient minimum contacts with the forum state to allow personal jurisdiction to be exerted and that the exercise of such jurisdiction would be reasonable.

Thus, following Rockwell, the Circuit Court found that SNFA had established minimum contacts sufficient that it should expect to be hailed into court and that the exercise of jurisdiction over it would be reasonable.

The court concluded that sufficient minimum contacts existed between SNFA and the State of Illinois. The malfunction of the bearings and the injury (the helicopter crash) both occurred in Illinois; the fact that the sale of the ball bearings occurred in Louisiana was of no moment. The court rejected SNFA's argument that it had only sold bearings to Agusta in Europe and should not be subject to jurisdiction as a result of Agusta's sale to its U.S. subsidiary. Rather, the court held that SNFA's manufacture of custom-made ball bearings for Agusta showed that SNFA intended its product to be part of Agusta's distribution system and should expect that its bearings would be marketed in any state in the U.S. SNFA chose to let Agusta do all the marketing and distribution to consumers and was thus dependent upon Agusta having a market and demand for its helicopters. At the least, SNFA benefited, and intended to benefit, from Agusta's marketing and distribution.

III. The Exercise of Personal Jurisdiction Was Reasonable.

Having held that sufficient minimum contacts existed, the Circuit Court held that the exercise of jurisdiction in this instance was reasonable. To arrive at this conclusion the court considered: (1) the burden on SNFA; (2) Illinois' (the forum state) interest in resolving the dispute; (3) the plaintiff's interest in obtaining relief; (4) the interest of affected forums, including Illinois, in the most efficient resolution of the dispute; and (5) the interest of the affected forums in the advancement of substantive social policies.

First, the helicopter crash and death of the plaintiff's brother had occurred in Illinois, giving that state an interest in resolving the dispute. To this point, the court noted that Illinois' interest was particularly strong since the crash concerned the provision of ambulance services to Illinois residents and citizens. Second, the court held that the plaintiff had a strong interest in obtaining relief for his brother's estate. Third, Illinois had a strong interest in the efficient resolution of the dispute arising within the state. Fourth, according to the court, Illinois had a strong interest in advancing the substantive social policy of compensating victims for torts occurring in Illinois and of ensuring the safety of air ambulance services utilized by Illinois' citizens.

The court recognized the heavy burden upon SNFA of having to litigate in Illinois. However, it found that all the other factors weighed in favor of exercising jurisdiction and that those factors outweighed the burden upon the defendant. Since SNFA had designed and custom-made a product which was intended to be, and was in fact, sold in the United States, and which had failed and caused injury in the very market in which it was intended to be sold, it was not unreasonable or unfair, according to the court, to require SNFA to be subject to suit in that forum.

IV. The Exercise of Jurisdiction Complied With The Due Process Requirements of The Illinois Constitution.

Under the Illinois Constitution, an Illinois court may only exercise jurisdiction over a nonresident defendant when it is fair, just, and reasonable to require the defendant to defend the action in Illinois, considering the quality and nature of its acts which occurred in, or affected interests in, Illinois.

The Circuit Court found that the exercise of jurisdiction over SNFA met with the due process requirements of the Illinois Constitution; the helicopter had crashed on Illinois soil; the helicopter had been involved in providing ambulance services to Illinois citizens and residents; the allegedly defective bearings had been custom-made by SNFA for the particular model of aircraft at issue; by custom-making the parts, SNFA had made itself dependent on Agusta's marketing and distribution network; and it was reasonably foreseeable to SNFA that it would be hailed into court in an American forum, particularly since it had been previously subject to jurisdiction for the alleged failure of the same part, in the same model aircraft, manufactured by the same company.

V. Authors' Note

At first glance, Russell v. SNFA follows the black-letter law of personal jurisdiction: a nonresident defendant will be subject to specific personal jurisdiction in the forum state when he has engaged in sufficient acts within, or directed at, the forum state that he should reasonably anticipate being hailed into court there for alleged injuries arising out of those acts, and the exercise of jurisdiction is reasonable. However, Russell v. SNFA pushes the boundaries of this rule one step further: in Illinois, at least, a potential defendant may be deemed to have sufficient minimum contacts with, and thus be subject to personal jurisdiction in, a forum state on the basis of its customers' distribution chains, at least if the potential defendant produces products in accordance with its customers' specifications.