The following is the long essay question from the midterm, plus the key I used for grading it:
Essay Question. (42 points)
D1 was born and raised in Madison, Wisconsin (in the Western District of Wisconsin). She also attended university in Madison, where she earned a chemistry degree. In 2000, she decided to work for the D2 Corp., which at the time had a laboratory in Madison. After the lab closed in 2010, the D2 Corp. removed all of its employees from the United States (except for a plant in Oregon). D1 became a chemist on-call for the D Corp., living out of a suitcase and moving from lab to lab on a temporary basis as needed. As a result, she sold her house in Madison and since 2010 hadn’t visited Wisconsin once. Since January of 2013, she has been working at a D2 Corp. plant in the United Kingdom, staying in a hotel. But she was promised in March of 2013 that she would be set up permanently in a new lab in Portugal when it was completed in 2014. When she visited the construction of the lab in April of 2013, she decided she liked Portugal and concluded that she wanted to make the place her home.
The D2 Corp. is a high-quality lubricant manufacturer incorporated in, and with its headquarters in, the United Kingdom. It has laboratories and plants all over the world. Its only presence in the United States is the plant in Oregon. The D2 Corp. sells its products to a single worldwide distributor—Lubricants, Inc.—a Canadian corporation, with its principal place of business in Canada. Lubricants, Inc. sells D2 Corp. lubricants, as well as many other lubricants, to many manufacturers all over the world.
The only U.S. manufacturer that Lubricants, Inc. sells its products to is Bikes Corp., which is incorporated in and has all its employees, officers and directors in California. Bikes Corp. ships its products all over the United States. 5% of its sales are in Wisconsin. But D2 Corp. lubricants also get into hundreds of other products that are sold in the United States by foreign manufacturers who have bought the lubricant from Lubricants, Inc. The value of the D2 Corp. lubricants in products in Wisconsin is about $30,000—around .09 % (that is, 9/10,000) of the D2 Corp.’s total sales.
While she was working at a D2 Corp. lab in Brazil in June, 2012, D1 invented a new compound for lubricating bearings, Chemical X. The D2 Corp. considered Chemical X an important new product and began production at the Oregon plant in December of 2012, after getting the necessary regulatory approvals from various governments, including the United States. Unfortunately Chemical X was defective and in fact resulted in the bearings being worn down prematurely. Production was stopped in May 2013, but some Chemical X had already been sold to Lubricants Inc., which sold it to Bikes Corp. Bikes Corp. put it in around 200 bikes.
One of those bikes was sold by Bikes Corp. to a bike store in Milwaukee, Wisconsin (in the Eastern District of Wisconsin). P, a citizen of Wisconsin, bought the bike, whose front wheel promptly fell off only a few blocks from the store, while P was riding it home. The accident was due to the effect of Chemical X. P suffered serious harm: she broke her arm and leg and now has permanent back pain. P filed suit under Wisconsin negligence and product liability law against D1 and the D2 Corp. in August 2013 in the Federal District Court for the Eastern District of Wisconsin. Service on the D2 Corp. was on the Chief Legal Officer of the D2 Corp. while he was in Milwaukee, Wisconsin, to inspect the bicycle that caused the accident. D1 was served in hand at her lab in the United Kingdom.
When deposed in his office in London, the CEO of the D2 Corp. admitted that he was aware that D2 Corp. lubricants were in products throughout the United States.
Is there subject matter jurisdiction for P v. D1 & the D2 Corp.? (10 points) Is there personal jurisdiction over the defendants? (30 points) Is there venue? (2 points)
The following is the point system I used for grading. Notice that the points add up to more than the total possible. This is not a problem, because no one ever gets all the points.
There is clearly no SMJ
[1 point] mention that the only possibility of SMJ would be alienage under 1332(a)(2)
[1 point] the D2 Corp is a UK/UK citizen by virtue of its state of incorporation and principal place of business being in the UK
[3 points] D1 keeps her Wisconsin domicile unless she establishes a new one
[3 points] It is unlikely that she established a Portuguese domicile because she had presence in Portugal only when she had the intent to make it her home in the future (when the lab was completed), not at that time
[5 points] Even if she did establish a Portuguese domicile, there STILL would not be SMJ, because she would be a US citizen (she was born in the US) domiciled abroad. Like Eliz. Taylor, she would fall through the cracks of the diversity statute.
There is clearly Venue
[2 points] a substantial part of the events giving rise to the claim occurred in the E.D. Wisc., so there is clearly venue there
PJ over the defendants is unclear
[1 point] under FRCP 4(k)(1)(A), there is PJ over a defendant only if there would be PJ in a Wisconsin state court (we know nothing about Wisc. law on PJ, so that can be ignored – the question is only the 14th Amendment)
PJ over D1
[2 points] traditionally there is general PJ over an individual where she is domiciled, so if D1 is still domiciled in Wisc., then traditionally she would be subject to PJ there for any cause of action
[5 points] a discussion about whether such a theory of PJ would satisfy International Shoe. After all, she no longer has any contact with Wisc. Is it really in keeping with Int’l Shoe to subject her to general PJ there? In this connections some discussion of Burnham would be appropriate. Perhaps we could use Scalia’s theory – there is PJ, because it existed at the time of Pennoyer and is still generally accepted by the states today?
[3 points] a discussion of possible specific PJ over D1 – this would be very unlikely since she really had no control over the sales of Chemical X
PJ over D2 Corp.
[2 points] The tagging of the CLO does nothing to establish general PJ
[1 point] the past factory is irrelevant for general PJ, because current contacts are needed and even if it was a current factory, it would not make the corporation "at home" in Wisc. given Daimler
[2 points] this is a stream of commerce case – the product causing harm made it into the forum state through the stream of commerce
[4 points] an articulation of Breyer's approach in McIntyre, which is similar to the Stevens/Brennan approach in Asahi, and is probably the binding standard
- it is enough for PJ that the D knows that there is a regular flow of the product into the forum state
[3 points] there was no regular flow of Chemical X into Wisc.
[2 points] does it matter that there was a known regular flow of other D2 Corp. products into Wisc.?
[4 points] a discussion of the Kennedy approach in McIntyre, which is the same as the O’Connor approach in Asahi – knowledge of regular flow into the forum state is not enough – one needs an extra something that shows an intent to reach out to the forum state – that’s not so here
[2 points] a discussion of the Ginsburg approach in McIntyre - given that this is a foreign defendant, the question is solely whether the D reached out to the US as a whole
[2 points] is Ginsburg’ approach relevant here, since the factory producing Chemical X is in Oregon?
[4 points] a discussion of whether events after the cause of action (in particular, the fact that the CLO visited Wisc.) might be relevant for specific PJ
[3 points] McGee factors – which argue for PJ
I did not care whether you found PJ over the Ds or not. What mattered is the extent to which you brought up the relevant considerations above.