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04/19/89 Chester Lichon, v. Aceto Chemical Company

April 19, 1989

CHESTER LICHON, PLAINTIFF

v.

ACETO CHEMICAL COMPANY, LTD., DEFENDANT AND THIRD-PARTY, PLAINTIFF-APPELLANT (J.D. CAMPBELL SALES, LTD., THIRD-PARTY DEFENDANT-APPELLEE)



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

538 N.E.2d 613, 182 Ill. App. 3d 672, 131 Ill. Dec. 238 1989.IL.546

Appeal from the Circuit Court of Cook County; the Hon. Lester D. Foreman, Judge, presiding.

Rehearing Denied June 7, 1989.

APPELLATE Judges:

PRESIDING JUSTICE FREEMAN delivered the opinion of the court. McNAMARA* and RIZZI, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

Plaintiff, Chester Lichon, filed suit against defendant, Aceto Chemical Company, Ltd. (Aceto), in the circuit court of Cook County for personal injuries sustained when he came in contact with drums leaking a chemical known as Phorate Technical, owned by Aceto. Aceto filed a third-party complaint for contribution against the Phorate's manufacturer, J.D. Campbell Sales, Ltd. (Campbell), an English company. Service of summons was had upon Campbell in England. Pursuant to Campbell's motion, the trial court dismissed Aceto's amended third-party complaint for lack of personal jurisdiction on the basis of Asahi Metal Industry Co. v. Superior Court (1987), 480 U.S. 102, 94 L. Ed. 2d 92, 107 S. Ct. 1026. Aceto appeals.

Aceto's amended third-party complaint alleged the following facts. Campbell shipped 72 drums of Phorate Technical from Greenock, England, to Port Seatrain, Weehawken, New Jersey, for Aceto. The Phorate Technical was intended for delivery to Aceto's customer, Aidex, in Council Bluffs, Iowa. On December 12, 1976, the truck transporting the Phorate to Iowa overturned. On December 15, it was discovered at the Chicago terminal of the trucking company that the drums of Phorate were leaking. The record further reveals that Phorate Technical is used in the manufacture of insecticides.

Aceto also alleged that Campbell knew or should have known that Aceto would transport the Phorate by truck and that, given the highly toxic nature of Phorate, drums of adequate strength and labeling would be required in the event of an accident. Aceto alleged that Campbell's negligent failure to provide adequate containers and labeling was the proximate cause of the leaking drums and the injuries to plaintiff.

Opinion

In Asahi, eight Justices agreed that the State of California's exercise of jurisdiction over a Japanese defendant would be fundamentally unfair, i.e., not in keeping with "traditional notions of fair play and substantial Justice." (Asahi, 480 U.S. at 113, 94 L. Ed. 2d at 105, 107 S. Ct. at 1033.) The court stated that the reasonableness of the exercise of jurisdiction depended in each case on the burden to the defendant, the interests of the forum State, the plaintiff's interest in obtaining relief and the interests of other States or, as in the case before it, other nations in obtaining the most efficient resolution of controversies. Asahi, 480 U.S. at 113, 94 L. Ed. 2d at 105, 107 S. Ct. at 1033-34.

The Justices split, however, over whether the Japanese defendant otherwise had sufficient minimum contacts with the State of California to allow California to exercise jurisdiction over it.

Justice O'Connor, with whom three Justices concurred, stated that "the substantial connection," necessary for minimum contacts between a defendant and forum State "must come about by an action of the defendant purposefully directed toward the forum State." She further held that placing a product into the stream of commerce was not such an act "without more." Finally, Justice O'Connor held that a defendant's "awareness that the stream of commerce may or will sweep the product into the forum State did not convert the mere act of placing the product into the stream" into an act purposefully directed at the forum State. Because the Japanese defendant neither solicited, did business, advertised, had offices, agents, employees or property in California, nor created, controlled or employed the distribution system that brought its valves to California, Justice O'Connor concluded that it had not purposefully availed itself of the California market. Asahi Metal Industry Co. v. Superior Court (1987), 480 U.S. 102, 112, 94 L. Ed. 2d 92, 104, 107 S. Ct. 1026, 1033 (opinion of O'Connor, J., joined by Rehnquist, C.J., and Powell and Scalia, JJ.).

Justice Brennan, with whom three Justices also concurred, concluded that a defendant's mere awareness that the stream of commerce would sweep its product into the forum State sufficed to establish the minimum contacts necessary for an exercise of jurisdiction over the defendant by the forum. Justice Brennan reasoned that as long as a participant in the stream of commerce, i.e., the regular, anticipated flow of products from manufacture to distribution to retail sale, was aware that the final product would be marketed in the forum State, the possibility of a lawsuit there could not come as a surprise. Justice Brennan believed that benefits to such a defendant accrued regardless whether it directly-conducted business in the forum State or engaged in additional conduct directed toward that State. Asahi Metal Industry Co. v. Superior Court (1987), 480 U.S. 102, 116, 94 L. Ed. 2d 92, 107, 107 S. Ct. 1026, 1035 (opinion of Brennan, J., joined by White, Marshall and Blackmun, JJ.).

On appeal, Aceto contends that the requirements of the unanimous opinion in Asahi for the exercise of personal jurisdiction over a foreign defendant, in keeping with traditional notions of fair play and substantial Justice, were met in this case. It further asserts that the requirements for the exercise of personal jurisdiction over Campbell under the stream of commerce theory of minimum contacts espoused by Justice Brennan in Asahi were also met in this case. Finally, Aceto maintains that our supreme court's opinion in Wiles v. Morita Iron Works Co. (1988), 125 Ill. 2d 144, 530 N.E.2d 1382, does not compel a contrary Conclusion.

In Wiles, our supreme court concluded that both of the stream of commerce theories of minimum contacts articulated in Asahi required the defendant's awareness that his product was being marketed in the forum State. Relying on the defendant's lack of awareness that the plaintiff's employer intended to transport to Illinois two of the four machines purchased from it in Japan or that the employer had a plant in Illinois, the Wiles court found that the defendant did not have the requisite minimum contacts with Illinois. (Wiles, 125 Ill. 2d at 160.) The Wiles court also stated that "[factors] such as the plaintiff's interest in obtaining relief, the burden on the defendant in being forced to litigate in a foreign forum, and the forum State's interest in adjudicating the matter are generally addressed only after 'it has been decided that a defendant purposefully established minimum contacts with the forum State.'" (Wiles, 125 Ill. 2d at 161-62, quoting Burger King Corp. v. Rudzewicz (1985), 471 U.S. 462, 476, 85 L. Ed. 2d 528, 543, 105 S. Ct. 2174, 2184.) In other words, a court need not inquire whether the exercise of personal jurisdiction over a defendant would comport with traditional notions of fair play and substantial Justice where the defendant has no minimum contacts with the forum.

Aceto asserts that, unlike the situation in Wiles, Campbell shipped its product to the United States, i.e., introduced it into the stream of commerce, and was aware that Aceto would transport and distribute it through any number of States, including Illinois, to buyers of the product. Aceto reasons that, in using it as a distributor, Campbell was purposefully availing itself of Illinois in the process of marketing its product. Aceto notes the Wiles court's recognition of Justice O'Connor's reliance in Asahi on the fact that Asahi had not designed its product with the California market in mind. In contrast, Aceto asserts, Campbell had to design its product, its container and labelling for all the United States, including Illinois, i.e., for approval by the United States Environmental Protection Agency, regardless whether its product was being used in or merely transported through any State. Because Campbell must have known of the highly toxic nature of its product, EPA requirements to which it was subject and the use for its product throughout the United States, Aceto finally concludes, it had sufficient minimum contacts with Illinois for the exercise of jurisdiction over it.

On the other hand, Campbell asserts that under Wiles we must determine first whether it had sufficient minimum contacts with Illinois and, only if it did, then determine whether an exercise of personal jurisdiction over it would offend traditional notions of fair play and substantial Justice. Campbell asserts that under either Justice O'Connor's or Justice Brennan's interpretation of the stream of commerce theory of minimum contacts, it had insufficient contacts with Illinois.

Specifically, Campbell notes the following. It does no business and has no plants or agents in Illinois. Its negotiations and other dealings with Aceto took place either at Aceto's headquarters in Flushing, New York, or Campbell's headquarters in Manchester, England. Moreover, it notes that in Wiles the American buyer of the product at issue delivered it to and used it in Illinois and there was evidence that the Japanese defendant had knowledge of the buyer's intent to do so. It asserts that here, in contrast, its product was intended for delivery to and use in Iowa, not Illinois, and that Campbell was not aware that its product would be marketed in, or even pass through, Illinois. Given the Japanese defendant's knowledge in Wiles of the buyer's intent to deliver its product to and use it in Illinois, Campbell argues, similar knowledge on its part of Aceto's plans for the Phorate would be insufficient to establish minimum contacts with Illinois.

Even assuming that Campbell did have sufficient minimum contacts with Illinois under either Justice O'Connor's or Justice Brennan's interpretation of the stream of commerce theory, Campbell argues, the exercise of jurisdiction over it would offend traditional notions of fair play and substantial Justice. Campbell lastly asserts that, contrary to Aceto's assertion, the fact that Phorate is a highly toxic substance has no bearing on the determination whether Illinois may exercise personal jurisdiction over it. Campbell likens Aceto's argument to, inter alia, ...


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