Montgomery v. Airbus Helicopters, Inc., 414 P.3d 824 (2018)

March 6, 2018 · Oklahoma Supreme Court · No. 114,045
414 P.3d 824

Anke MONTGOMERY, Individually and as Personal Representative of the Estate of Mark Montgomery, Deceased; EagleMed, L.L.C.; a Delaware Corporation, and Starr Indemnity and Liability Company, a Texas Corporation and Domiciliary, Plaintiffs/Appellants,
v.
AIRBUS HELICOPTERS, INC., a Delaware Corporation; And Soloy, LLC., Defendants/Appellees,
and
Honeywell International, Inc., Defendant.

No. 114,045

Supreme Court of Oklahoma.

FILED March 6, 2018

Robert D. Tomlinson, Ross N. Chaffin, Oklahoma City, Oklahoma, and Timothy A. Loranger (pro hac vice), Los Angeles, California, for Plaintiff/Appellant Anke Montgomery.

Craig Allen Fitzgerald, Steven J. Adams, Tulsa, Oklahoma, and Gary Don Swaim (pro hac vice), Dallas, Texas, for Plaintiffs/Appellants EagleMed, L.L.C. and Star Indemnity and Liability Company.

Mark R. McPhail, Alex M. Sharp, Oklahoma City, Oklahoma, and Eric C. Strain (pro hac vice), San Francisco, California, for Defendant/Appellee Airbus Helicopters, Inc.

Brock C. Bowers, Katie R. McCune, Oklahoma City, Oklahoma, and Geffrey W. Anderson (pro hac vice), Jonathan W. Harrison (pro hac vice), Fort Worth, Texas, for Defendant/Appellee Soloy, L.L.C.

KAUGER, J.:

¶1 We granted certiorari to address whether the defendants/appellees whose products were used to make an ambulance helicopter had sufficient minimum contacts with the State of Oklahoma in order to establish personal jurisdiction over them after the helicopter crashed in Oklahoma, killing two Oklahoma residents. We hold that they do not.

FACTS

¶2 This cause arises from an ambulance helicopter crash (accident helicopter), on February 22, 2013, shortly after takeoff in Oklahoma City, Oklahoma. The pilot, Mark *826Montgomery (pilot), and his crew, responded to an emergency medical transport call at Integris Baptist Hospital in Oklahoma City, Oklahoma for Watonga, Oklahoma. The crash killed two Oklahoma residents who were onboard the helicopter: the pilot, and the flight nurse, Chris Denning. The onboard flight paramedic, Billy Wynne, survived with severe injuries which resulted in amputation. The crash destroyed the helicopter. Allegedly, the crash was witnessed by dozens of Oklahoma residents.

¶3 EagleMed, L.L.C. (EagleMed), a Delaware incorporated L.L.C. with its principal place of business in Wichita, Kansas, employed the Oklahoma pilot and the crew. EagleMed operates a helicopter ambulance service for the region. The crash was allegedly caused by an air intake defect which allowed ice to accumulate in the air inlet and enter the compressor, causing the engine to flame out and crash.

¶4 Airbus Helicopters SAS, a French Company, designed and manufactured the accident helicopter in France, and sold it to the appellee, Airbus Helicopters, Inc. (Airbus), a Grand Prairie, Texas, company. The original engine was replaced by Honeywell International, Inc. (Honeywell) of Morristown, New Jersey, who designed and manufactured the replacement engine. An Olympia, Washington company, Soloy, L.L.C. (Soloy), provided the engineering and design for installation of the engine. Starr Indemnity and Liability Company (Starr) insured the helicopter.

¶5 In 2004, Airbus sold the helicopter, an AS350B, to Ballard Aviation, Inc. d/b/a EagleMed. Airbus delivered the helicopter in an unassembled condition to Texas for shipment, but it did not make the arrangements for it to be delivered to Wichita, Kansas. Rather, the Airbus standard practice was to deliver their helicopters to their place of business in Texas, and have the buyers handle any further transportation services. The purchase agreement between EagleMed and Airbus contained a forum selection and choice of law clause regarding any litigation to take place in Texas.1

¶6 According to Airbus, it: 1) does not conduct any business activities in Oklahoma; 2) is not registered to do business in Oklahoma, nor does it own any real or personal property in Oklahoma; 3) does not keep any officers, directors, employees, or agents in Oklahoma; and 4) does not hold any bank accounts or have any telephone listings in Oklahoma. However, Airbus did know that this helicopter would be going to EagleMed's headquarters in Wichita and purportedly knew it would be used in Oklahoma.

¶7 On July 21, 2008, four years after EagleMed purchased the helicopter from Airbus, Soloy sold and shipped an "engine conversion kit" to EagleMed at their headquarters in Wichita, Kansas, which was installed shortly thereafter. According to Soloy, it did not specifically design its conversion kit for the Oklahoma market, nor did it direct advertising or marketing materials specifically to Oklahoma. Soloy has no offices, agents, employees, or property in Oklahoma nor does it distribute to Oklahoma.2

¶8 In 2009, EagleMed sold the helicopter to Wells Fargo Equipment Finance, Inc. who leased it back to EagleMed. EagleMed is an established Oklahoma air ambulance service. It is licensed by the Oklahoma Secretary of State and the Department of Health. It has five Oklahoma "bases," serving the entire state. At the time it purchased the helicopter, EagleMed had two Oklahoma "bases" and eight helicopters. The purchase was specifically for the establishment of its third base with Airbus' alleged knowledge.

*827¶9 EagleMed operates out of three states, but services five states: Kansas, Oklahoma, Missouri, Arkansas, and Nebraska. The main base in Wichita advertised that it could service the northern part of Oklahoma in less than 24 minutes. Airbus has offered continuous technical support to EagleMed regarding their helicopters, but none of the communication was directed to a base in Oklahoma. All communication was made with the main base in Wichita, even though it is likely that some of the communication regarded helicopters which were located in Oklahoma.

¶10 On August 16, 2013, the flight nurse's family (Denning family) sued Airbus, Airbus SAS, Soloy, and Honeywell for wrongful death, negligence, and products liability in the 141st District Court in Tarrant County, Texas. On April 7, 2014, the pilot's widow intervened alleging similar claims. On June 23, 2014, EagleMed also intervened in the Texas lawsuit, alleging claims for loss of the helicopter and other damages. The flight paramedic filed a separate claim without joining the other plaintiffs. In December of 2014, the defendants in the Texas lawsuit filed counterclaims against the pilot, arguing that the pilot's operational errors caused or contributed to the crash.

¶11 On February 13, 2015, the pilot's widow, EagleMed, and Starr, filed a products liability/negligence lawsuit against Airbus, Honeywell, and Soloy, in the District Court of Oklahoma County, Oklahoma. The same day, the widow and EagleMed filed a notice of non-suit in the Texas action which the Texas Court granted on February 25, 2015.3 They alleged that venue was proper in Oklahoma, because the accident occurred in Oklahoma County and because the defendants/appellees could properly be sued in Oklahoma County.

¶12 On March 23, 2015, Airbus and Soloy filed motions to dismiss for lack of personal jurisdiction pursuant to 12 O.S. § 2012(B)(2)4 and under the doctrine of forum non conveniens .5 Honeywell filed a motion to dismiss under the doctrine of forum non conveniens , but it did not raise the defense of personal jurisdiction under 12 O.S. § 2012(B)(2), thus waiving the issue.6 After additional briefings, a hearing was held on May 1, 2015, in which Montgomery's request *828for additional time to conduct jurisdictional discovery was denied.

¶13 In an order filed May 20, 2015, the trial court granted motions to dismiss for lack of personal jurisdiction to Airbus and Soloy, but it did not make any finding regarding forum non conveniens . The court determined that there was not enough evidence to establish personal jurisdiction and that additional discovery would be unnecessary. The claims against defendant Honeywell were stayed, pending resolution of an appeal.7 The Court of Civil Appeals affirmed the trial court. We granted certiorari on April 24, 2017.

THE TRIAL COURT DID NOT ERR IN GRANTING THE MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION.

¶14 Airbus and Soloy argue that they have no contacts with Oklahoma which would allow an Oklahoma court to assert jurisdiction over them. The pilot's widow, EagleMed, and Star Indemnity argue that because Airbus and Soloy sold their product to a company that has, and continues to use, millions of dollars worth of their products in Oklahoma. They also argue that because of these sales, Airbus and Soloy should be subject to Oklahoma jurisdiction. The record gives no indication that Airbus continued to earn revenue from this particular helicopter after its initial sale to EagleMed. In fact, at the time of the crash, the helicopter was not even owned by EagleMed.

¶15 In personam jurisdiction is the power to render a binding judgment against a defendant.8 When a plaintiff's cause of action does not arise directly from a defendant's forum related activities, a court could nonetheless maintain general personal jurisdiction over the defendant based on the defendant's business contacts with the forum state.9 However, general jurisdiction has been modified by the United States Supreme Court in DaimlerAG v. Bauman, 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) which reaffirmed that general jurisdictions exists only over a defendant who is at "home" within a state.10

¶16 It is undisputed that general jurisdiction does not exist against either defendant *829in this cause. Even if it were not agreed to be a non-issue, the facts of this cause could not pass the Daimler, supra, test for general jurisdiction. Nevertheless, if a defendant has purposefully directed activities at the residents of the forum, and the litigation results from alleged injuries that arise out of or relate to those activities, specific jurisdiction over a nonresident defendant may exist unless jurisdiction would be unreasonable or would offend the traditional notions of substantial justice and fair play.11

¶17 We review dismissal for lack of personal jurisdiction over a non-resident defendant de novo.12 When in personam jurisdiction is challenged, the jurisdiction over a non-resident defendant cannot be inferred, but instead must affirmatively appear from the trial court record, and the burden of proof in the trial court is upon the party asserting that jurisdiction exists.13 We canvas the record for proof that the nonresident party has sufficient contacts with the state to assure that traditional notions of fair play and substantial justice will not be offended if this state exercises in personam jurisdiction.14

¶18 Personal jurisdiction is a protection granted by the Due Process Clause of the Fourteenth Amendment of the United States Constitution15 and by the Oklahoma Constitution.16 Oklahoma's long arm statute for establishing specific jurisdiction is 12 O.S. 2011 § 2004(F).17 It sets the limits of the state's jurisdiction over a nonresident to the outer limits permitted of the Oklahoma and United States Constitutions.18 Consequently, the outer limits as defined by the United States Supreme Court are relevant to our inquiry.

¶19 Recently, the United States Supreme Court decided Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco, et al ., 582 U.S. ----, 137 S.Ct. 1773, 198 L.Ed.2d 395 (2017). In Bristol-Myers, the majority of the plaintiffs were not from the state where they filed their lawsuit, nor were they injured in that state. Nevertheless, it does provide the latest specific jurisdiction analysis from the Court. In Bristol-Myers, a group of more than 600 plaintiffs sued the pharmaceutical company over the drug Plavix in California, even though most of the plaintiffs were not California residents [only 86 were California residents].

¶20 The drug company was incorporated in Delaware and headquartered in New York and maintained substantial operations in both New York and New Jersey. The company sells Plavix in California; has five research and laboratory facilities in California; employs about 250 sales representatives in California; and maintains a small state-government advocacy office in Sacramento. However, it did not develop, create a marketing strategy, manufacture, label, package, or *830work on regulatory approval for Plavix in California. California sales of the drug accounted for only 1% of the company's total revenue for the years 2006 and 2012. The nonresident plaintiffs did not allege they were injured or treated for injuries in California.

¶21 The drug company moved to quash service of summons on the nonresident's claim, but the California Superior Court denied this motion finding that the California courts had general jurisdiction over the drug company. On appeal, the California Court of Appeals determined that California did not have general jurisdiction based on Daimler, supra, but that it did have specific jurisdiction over the nonresidents' claims. The California Supreme Court affirmed and the United States Supreme Court reversed, holding that California lacked specific jurisdiction to entertain the nonresidents' claims.

¶22 In Bristol-Myers, supra, the Court expressly rejected California's "sliding scale approach" which permitted the exercise of specific jurisdiction based on the notion that the more wide ranging the forum contacts, the more readily a connection between the forum contacts and the claim is shown. The Court noted that:

1) there must be an affiliation between the forum and the underlying controversy such as an activity or an occurrence that takes place in the forum State, which subjects the cause to the State's regulation; and
2) an adjudication of issues must derive from, or be connected with, the very controversy that establishes jurisdiction.

¶23 The Court also delineated that the interests to consider begin with the interests of the forum State and of the plaintiff in proceeding with the cause in the plaintiff's forum of choice. The primary concern which it recognized was the burden on the defendant. The burden on the defendant requires a court to consider the practical problems resulting in litigation in the forum, and also the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question.

¶24 Relying on another case concerning specific jurisdiction, Walden v. F i ore, 571 U.S. 12, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014), the Court noted that a defendant's relationship with a third party, standing alone, is an insufficient basis for jurisdiction. Because it was not alleged that the drug company engaged in relevant acts together with its California distributor, or that it was derivatively liable for the distributor's conduct the Court held the requirements of InternationalShoeCo., v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed 95 (1945) were not satisfied. Because the non-California residents were not attempting to show that the drug they took was distributed to the pharmacies that dispensed to them in California, the fact that the drug company contracted with a California distributor was not enough to establish personal jurisdiction.

¶25 In Walden v. Flore, supra, a Georgia police officer working as a Drug Enforcement Agent (DEA) at a Georgia airport confiscated $97,000.00 in cash that the plaintiffs, California and Nevada residents, were carrying on August 8, 2006. According to the plaintiffs, they were professional gamblers and had been gambling at a casino in Puerto Rico. The Georgia police officer advised the plaintiffs that their funds would be returned if they later proved a legitimate source for the cash. The funds were eventually returned by the DEA in March of 2007.

¶26 The professional gamblers filed a lawsuit against the Georgia police officer in Nevada (one of the gambler's home states). The trial court dismissed the lawsuit on lack of personal jurisdiction. The 9th Circuit Court of Civil Appeals reversed. The Supreme Court determined that personal jurisdiction over the Georgia police officer did not belong to Nevada. The Court noted two important aspects which were necessary for jurisdiction: 1) the relationship between the defendant and the forum State must arise out of contacts that the defendant "himself" creates with the forum State; and 2) "minimum contacts" analysis looks to the defendant's contacts with the forum State itself, not the defendant's contact with persons who reside there. While physical presence in the forum is not a prerequisite to jurisdiction, the plaintiff *831cannot be the only link between the defendant and the forum. The Georgia officer's actions never formed any jurisdictionally relevant contacts with Nevada, therefore, personal jurisdiction in Nevada could not exist.

¶27 In Bristol-Myers, supra, and Walden, supra, the Court, relying on its previous minimum contacts cases, clarified specific jurisdiction analysis and omitted from that analysis any previous "stream of commerce" analysis. [By omitted, we mean the Court neglected to mention it at all, presumptively, at least implicitly, rejecting such analysis.] Our prior precedents worked much like the California "sliding scale" approach which the Court expressly rejected Bristol-Myers, supra. It focused either on the "totality of contacts" between the non-resident defendant[s] and the State of Oklahoma and the resident plaintiff[s], or the nature of the contacts and whether the contact occurred in the "stream of commerce."19 For example, in Guffey v. Ostonakulov, 2014 OK 6, 321 P.3d 971, after the Oklahoma buyer filed a fraud and consumer protections lawsuit, we addressed whether an Oklahoma district court had in personam jurisdiction over a Tennessee individual and corporation which sold a motor vehicle to an Oklahoma resident through eBay.

¶28 In Guffey, supra, the purchase was not a single, isolated transaction on eBay made by a random seller to an Oklahoma resident. Rather, the seller used eBay as a central and regular aspect of their business which allowed them to reach out and to sell to potential buyers in numerous states. Nor was the particular sale at issue an isolated contact between the Oklahoma buyer and the Tennessee seller. For instance, the seller had reached out to the buyer before the eBay auction ended in an attempt to negotiate a sale outside of the eBay process. Written communications were also exchanged between the buyer and seller's father's office in Oklahoma and the vehicle was subject to a thirty-day warranty. This created a continuing obligation between the Tennessee seller and the Oklahoma buyer, after the vehicle was shipped to Oklahoma to be registered and driven in Oklahoma.

¶29 We said, in a unanimous opinion, that:

¶26 Defendants are involved in the commercial sale of vehicles to numerous states, and eBay is a primary means through which they conduct these sales. Defendants negotiated with Guffey directly over the vehicle eventually sold to her in Oklahoma, warrantied that vehicle while it was to be titled and driven in Oklahoma, and have allegedly engaged in more than one such transaction in this state. The totality of Defendants' contacts with Oklahoma constitute more than sufficient minimum contacts for the exercise of in personam jurisdiction to be reasonable and comport with traditional notions of fair play and substantial justice.

¶30 Our other cases have reached similar results when the contact was directly between the non-resident and the Oklahoma resident.20 While there may have been some *832continuing obligations between EagleMed, Airbus, and Soloy regarding warranties, or keeping the aircraft in a safe, working order,21 there was no direct contact between Airbus and Soloy and the deceased Oklahoma pilot whose widow is the plaintiff in this cause. The only direct contacts appear to be between the non-resident EagleMed and the non-residents Airbus and Soloy which took place in Texas and in Kansas where the aircraft and engine were sold, contracted, and delivered and it appears this contact is insufficient under the teachings of Bristol-Myers, supra, for specific personal jurisdiction to exist. Furthermore, financial benefits accruing to the defendant from a collateral relation to the forum State will not support jurisdiction if they do not stem from a constitutionally cognizable contact with that State.22

¶31 Prior to Bristol-Myers, supra, in World-WideVolkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the New York resident plaintiffs were involved in a car crash in Oklahoma. The plaintiffs sued the car dealer who sold them their car in New York, arguing that minimal contacts were met because it was foreseeable for a car to be driven across the country, thus submitting the non-resident defendant's to jurisdiction. The Court denied the argument because it was merely fortuitous that a single car sold in New York to New York residents would crash in Oklahoma.23

¶32 However, World-WideVolkswagen, supra, noted that "the forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State."24 The Court later diverged into two competing tests, in a plurality opinion, for a "stream of commerce" analysis in AsahiMetalInd., LTD v. SuperiorCt.ofCalifornia, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). In Asahi, the Court agreed on the result that no personal jurisdiction was established, but diverged on which approach to use in reaching that result.25

¶33 The two diverging tests from Asahi are the "stream of commerce plus" test from Justice O'Connor's opinion which requires some "[a]dditional conduct of the defendant [that] may indicate an intent or purpose to serve the market or the forum State."26 Justice Brennan's more lenient view allows jurisdiction when "the regular and anticipated flow of products" reaches the forum state with no additional conduct needed.27

*833¶34 This Court addressed and utilized a stream of commerce analysis in State ex rel. Edmondson v. NativeWholesaleSupply, 2010 OK 58, 237 P.3d 199 ( NWSI ).28 In NWSI, the State of Oklahoma filed a lawsuit in Oklahoma against a nonresident Canadian-chartered cigarette importer and distributor, Native Wholesale Supply (NWS). NWS moved for dismissal based on lack of personal jurisdiction which the trial court denied. NWS appealed.

¶35 We analyzed the personal jurisdiction issue without formally adopting either the O'Connor or Brennan test. However, we stated that if the "stream of commerce plus" test was satisfied, by definition, Brennan's less stringent test was also satisfied. We held that personal jurisdiction existed because the sheer quantity of cigarettes "for reservation sales only" sold in the state on tribal land was also for sales to the general public of Oklahoma off tribal land. NWS was not an innocent bystander because it reaped hefty financial benefits. The State alleged that over a fifteen-month period more than one hundred million cigarettes worth more than eight million dollars were sold into the Oklahoma market. The volume of cigarettes sold in the state revealed that the Company was part of a distribution channel intentionally to bring their product into the State.

¶36 NWSI established that Justice O'Conner's stricter 'stream of commerce plus' test can be met when a defendant's conduct outside the forum results in their product being placed in the forum and they know and benefit from that placement.29 However, subsequent, to Bristol-Myers, supra, we must conclude that any "stream of commerce" test applied to Airbus and Soloy products used by EagleMed cannot establish Oklahoma jurisdiction for several reasons:

1) Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco, et al ., 137 S.Ct. 1772 [582 U.S. ----, 137 S.Ct. 1773], 198 L.Ed.2d 395 (2017) requires an affiliation between the forum and the underlying controversy, an activity or an occurrence that takes place in the forum State, which subjects the cause to the State's regulation. The adjudication of issues must derive from, or be connected with, the very controversy that establishes jurisdiction. Accordingly, a "sliding scale" approach, or "totality of the contacts" or "stream of commerce" approach is insufficient to establish specific personal jurisdiction.
2) Pursuant to Walden v. Flore [Fiore], 134 S.Ct. 1115 [571 U.S. 12, 134 S.Ct. 1115] 188 L.Ed.2d 12 (2013) [ (2014) ], a defendant's relationship with a third party, such as EagleMed, is an insufficient basis for jurisdiction.
*8343) EagleMed's unilateral choice to fly the helicopter into Oklahoma cannot serve as a basis for subjecting Airbus and Soloy to suit in Oklahoma. See BurgerKingCorp. v. Rudzewicz, 471 U.S. 462, 475 [105 S.Ct. 2174, 85 L.Ed.2d 528] (1985) ("This 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result ... of the unilateral activity of another party or a third person."30

Perhaps equally persuasive, is the United States Supreme Court's action two recent cases. In Galier v. Murco Wall Products, Inc., Docket No. 17-733, an Oklahoma Court of Civil Appeals Case,31 and Simmons Sporting Goods v. Lawson, Docket No., 17-109, an Arkansas Court of Civil Appeals Case,32 the Court, granted certiorari, vacated the judgment, and remanded the case back to the appellate courts for further consideration in light of Bristol-Myers, supra.

¶37 Oklahoma may have an interest in adjudicating this case. The crash happened in Oklahoma and the helicopter took off from a base in this State. The two people killed were citizens of this State. Most of the harm from this incident occurred in this State, but these facts alone, without Airbus, or Soloy having further direct and specific conduct with this State directly related to the incident giving rise to the injuries, is insufficient for asserting specific personal jurisdiction over them. Furthermore, we cannot see the need for additional jurisdictional discovery in this cause because the "totality of the contacts" or "stream of commerce" is no longer the analysis this Court will use to determine specific personal jurisdiction.

CONCLUSION

¶38 The emergency helicopter industry is not a traditional industry with a traditional manufacturer selling products to masses of consumers. Airbus and Soloy created very specific products but did not aim the products at Oklahoma markets. It sold those products to a company who operated regionally in Oklahoma, Texas, Kansas, Arkansas, Missouri and Nebraska. Nor did they solicit business from Oklahoma markets and Oklahoma residents. Consequently, minimum contacts with the State of Oklahoma were insufficient.

COURT OF CIVIL APPEALS OPINION VACATED; TRIAL COURT AFFIRMED.

*835COMBS, C.J., KAUGER, WINCHESTER, REIF, WYRICK, JJ., concur.

GURICH, V.C.J., concurs in result.

EDMONDSON, COLBERT, JJ., dissent.