Ninth Circuit Holds Battery Maker Made “Purposeful Availment” of the State of Hawai’i Sufficient for Personal Jurisdiction, Yet A Product Liability Case Did Not “Arise Out of Or Relate To” Those Contacts

In Yamashita v. LG Chem, Ltd., No. 20-17512 (9th Cir. Mar. 6, 2023), the Ninth Circuit holds in a products-liability case that there was no personal jurisdiction in Hawai’i over a USA subsidiary of a South Korean manufacturer headquartered in Georgia, despite that the company ships their products through Honolulu and sells some of its products in that state.

“Matt Yamashita brought this products-liability suit against LG Chem, Ltd. (‘LGC’) and LG Chem America, Inc. (‘LGCA’), claiming that they negligently manufactured and distributed a battery which he used to power an electronic cigarette until the battery and electronic cigarette both exploded in his mouth.” The allegedly defective product, an 18650 lithium-ion battery, was allegedly sold to the plaintiff by a third-party vendor (unnamed) in Hawai’i. LGC is headquartered in Seoul, South Korea, while its USA subsidiary LGCA is based in Atlanta, Georgia.

While neither defendant sold nor distributed the allegedly defective battery within the geographic boundaries of Hawai’I, plaintiff alleged other connections with the jurisdiction, including (1) the shipping of products, including 18650 lithium-ion batteries, from Asia to the States though Honolulu; and (2) the sale of solar-powered batteries to customers in the state.

The defendants moved to dismiss on personal-jurisdiction grounds and the plaintiff sought leave to serve jurisdictional discovery to respond to defendant’s motion. The district court denied the discovery and granted the motion to dismiss.

The Ninth Circuit affirms. It notes initially that there is no general personal jurisdiction over the defendants, as “[n]either LGC nor LGCA has Hawaii as its place of incorporation or principal place of business.”

So the primary focus of the opinion shifts to whether the alleged connections between defendants and Hawai’i are enough for specific personal jurisdiction. Under that standard, (1) the defendant must “take some act by which it purposefully avails itself of the privilege of conducting activities within the forum State,” and (2) plaintiff’s claims must “arise out of or relate to the defendant’s contacts with the forum” (quoting Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021)).

First, the panel finds a degree of purposeful availment by LGC or LGCA. In what the panel describes as the Ninth Circuit’s “stream-of-commerce-plus test,” it is not enough for a plaintiff to show that a defendant sold a product generally in the USA that it knew could find its way into a particular state. Instead, a defendant must “deliberately reach” into the state by setting up a market for its business or entering into a contract there. Here, “LGC and LGCA’s shipments to and through the port of Honolulu” and sale of solar batteries in the state would constitute some kind of purposeful availment.

Second, notwithstanding the purposeful availment, the panel holds that there was an insufficient nexus between defendants’ contacts with the forum state and the alleged injury in the case. The panel observes that the circuit has not yet “addressed a scenario in which the defendants had extensive forum contacts, and the main question was whether they sufficiently related to the plaintiff’s injury.” The panel extracts several principles from the Supreme Court’s recent Ford Motor decision:

¶ “[A] plaintiff’s injury relates to a defendant’s forum contacts if similar injuries will tend to be caused by those contacts.”

¶ “[A] plaintiff’s injury relates to a defendant’s forum contacts if the defendant should have foreseen the risk that its contacts might cause injuries like that of the plaintiff.”

¶ “[R]elatedness requires a close connection between contacts and injury.”

Applying these standards to the plaintiff’s claim, the panel finds insufficient relatedness. “Yamashita does not allege that LGC or LGCA shipped the subject battery into the port of Honolulu” or “that LGC’s activity in the solar battery market caused the introduction of the subject battery to Hawaii . . . . There is little reason to believe that either firm’s port contacts or LGC’s solar contacts have anything to do with Hawaii residents’ acquisition of 18650 lithium-ion batteries.”

The panel also affirms the district court’s decision not to allow jurisdictional discovery, through which the plaintiff had hoped to establish the defendants’ more direct role in introducing the 18650 lithium-ion battery into the state. “[E]ven if LGC or LGCA sells 18650 batteries to manufacturers for incorporation in consumer products sold in Hawaii, these sales would not be related to purchases of stand-alone batteries by Hawaii consumers.” There was also uncontested testimony that the companies never authorized third-parties to remove or resell the batteries to be used in other products.

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