United States District Court, D. Nebraska
FRANCO RIBEIRO and DEANNA RIBEIRO, as individuals and as next friends and biological parents of Lucas Ribeiro, an infant; Plaintiffs,
BABY TREND, INC., a corporation; MARK SEDLACK, MILLENIUM DEVELOPMENT CORP., INDIANA MILLS & MANUFACTURING, INC.; LERADO GROUP CO., LTD.; LERADO GROUP HOLDING COMPANY, LTD.; LERADO ZHONG SHAN INDUSTRIAL CO., LTD.; LERADO CHINA LIMITED; LERADO H.K. LIMITED; HOLMBERGS SAFETY SYSTEM HOLDING AB; GNOSJOGRUPPEN AB; HOLMBERGS CHILDSAFETY AB; GNOTEC REFTELE AB; MAXI MILIAAN B.V.; AND DOREL INDUSTRIES, INC., Defendants.
MEMORANDUM AND ORDER
F. Bataillon Senior United States District Judge
matter is before the court on motions to dismiss the
plaintiffs' seventh amended complaint for lack of
personal jurisdiction filed by defendants Gnotec Reftele AB,
Filing No. 341 ("Gnotec"); and Lerado
(Zhong Shan) Industrial Co., Ltd., Filing No. 347;
Lerado China Limited, Filing No. 348; Lerado Group
Company, Ltd., Filing No. 349; Lerado H.K. Limited,
Filing No. 350; Lerado Group (Holding) Company,
Ltd., Filing No. 351 (hereinafter, collectively,
"the Lerado defendants"). This is a products liability
action for damages for personal injuries. In their seventh
amended complaint, the plaintiffs allege that the restraint
system of a car seat manufactured and/or developed by the
defendants strangled and asphyxiated their child, causing the
child to suffer permanent brain and neurological injuries.
They assert claims for negligence, strict liability in tort,
breach of express and implied warranties and violations of
the Magnuson Moss Act. Jurisdiction is based on diversity of
citizenship under 28 U.S.C. § 1332.
Gnotec, a Swedish company, and the Lerado defendants, Chinese
companies, assert that they are not subject to the
jurisdiction of this court because they lack sufficient
minimum contacts with the State of Nebraska. Gnotec AB is a
foreign corporation that is incorporated under the laws of
Sweden, with its principal place of business in Sweden and
defendant Gnotec Refele AB is its wholly-owned subsidiary.
Filing No. 215, Memorandum in Support, Ex. A,
Declaration of Bo Isaacson. In their Seventh Amended
Complaint, the plaintiffs allege that Gnotec “acted
jointly and in concert with Baby Trend regarding the design
and manufacture of the 5-point harness system” in the
car seat. Filing No. 328, Seventh Amended Complaint
at 3. Specifically, the plaintiffs allege that Gnotec acted
jointly and in concert with the other defendants to
defectively “design, manufacture and incorporate into
the Car Seat a 5-point harness system that utilized a
‘puzzle buckle, ’ that in the normal use caused a
deceptive false latch click.” Id. at 6. The
plaintiffs also allege that the Laredo defendants acted
jointly and in concert with defendants Baby Trend, Mark
Sedlacek, and Millenium Development Corporation to
defectively design, manufacture, test and incorporate into
the subject Car Seat a concave bottom that permitted the Car
Seat to rock back and forth excessively when used in its
intended manner including, but not limited to, use as an
infant carrier and/or in the upright carry position and
placed on a flat surface." Id. at 6.
March 31, 2015, Lerado Group and Lerado China filed a Motion
to Dismiss the plaintiffs' Sixth Amended Complaint based
on Fed. R. Civ. P. 12(b)(5) (insufficient service of
process). Filing No. 201. In the same motion, the
other Lerado entities-Lerado Zhong Shan Industrial Co., Ltd.,
Lerado Group (Holding) Company Ltd., and Lerado H.K.,
asserted the defense of lack of personal jurisdiction.
Id., Motion at 2.
thereafter requested and were granted leave to conduct
jurisdictional discovery and an extension of time in which to
respond to the motions to dismiss. See Filing Nos.
209 & 221, Motions; Filing Nos.
212 & 224, Orders. On several unopposed
motions by the parties, the deadline for jurisdictional
depositions was ultimately extended to Nov. 30, 2015, the
deadline for responses to the motions extended to December
30, 2015, and the deadline to reply to the responses extended
to January 11, 2016. See Filing No. 225,
Motion; Filing No. 226, text order; Filing No. 239,
Motion; Filing No. 240 text order; Filing No. 244,
Motion; Filing No. 247, text order; Filing No. 254,
Motion; Filing No. 271, Order; Filing No.
315, Motion; Filing No. 317, text order. On December 23,
2015, the plaintiffs moved, unopposed, to extend all
deadlines, for leave to amend to add successor corporations
as defendants, and to bifurcate. Filing Nos. 318,
319, and 321. The court granted the motions
and the amended complaint was filed on January 7, 2016.
Filing Nos. 323, 324, and 327, text orders; Filing No.
328, Seventh Amended Complaint. The Lerado defendants
filed a reply brief to the plaintiffs brief opposing the
earlier motions to dismiss on January 8, 2016. Filing No.
330, Reply Brief. On January 29, 2016, the court denied
the then-pending motions to dismiss as moot in light of the
amended pleading. Filing No. 339, Order. On February
12, 2016, all five Lerado entities filed individual Motions
to Dismiss on the sole ground of lack of personal
jurisdiction. Filings Nos. 347-351.
plaintiffs deposed Kuang-Neng (Luke) Cheng, as the designated
Rule 30(b)(6) representative for Lerado Zhong Shan and Lerado
Group (Holding) Company Ltd., on August 19, 2015, and
November 11, 2015. See Filing No. 366-1,
Index of Evid., Affidavit of Emily Wischnowski at 1-2. The
record shows the Complaint and Summons were served on the
registered agents for Lerado China Limited in the British
Virgin Islands under Article 5 of the Hague Convention on
June 5, 2015 and on the registered agents for Lerado Group
Limited on June 2, 2015. See Filing Nos. 281 &
282, summonses returned executed. Gnotec was served
with process under the Hague Convention on or about April 5,
2015. Filing No. 215-1, Memorandum in Support, Ex.
A, Declaration of Bo Isaacson, ("Isaacson Decl.")
support of its motion, Gnotec submits evidence that it has no
tangible or intangible property in the State of Nebraska;
does not have representatives, agents, servants or employees
assigned to duty in Nebraska; does not send representatives,
agents, servants or employees to Nebraska for any purpose;
has no agent in Nebraska upon whom service of process may be
made; does not market its products in Nebraska and does not
solicit business from Nebraska; is not registered to do
business in Nebraska; has not entered into any contracts to
provide good or services in Nebraska. Filing No.
215-1, Isaacson Decl. at 3-5. It contends has not
engaged in any activities in the State of Nebraska or
directed to the State of Nebraska so as to purposefully avail
itself of the benefits and privileges of conducting business
in Nebraska nor has it had any “continuous and
systematic” contacts with the State.
Isaacson, Chief Financial Officer of Gnotec, testified that
Kendrion Holmbergs AB, now known as Gnotec Reftele AB,
manufactured the buckle that is represented to be the buckle
involved in this litigation. Filing No. 361-1, Index
of Evid., Deposition of Bo Isaacson, as the Rule 30(b)(6)
designated representative of Gnotec Reftele AB, at 21. After
manufacture, Gnotec sold the buckles to Lerado and shipped
them to Lerado in China. Id. at 38-40, 48, 83-84,
89. Gnotec knew Baby Trend was Lerado's customer when it
shipped its buckles to Lerado, but did not know that the
buckles were to be delivered to that customer. Id.
Laredo defendants also contend that no Laredo defendant is
licensed to do business in the State of Nebraska, has any
offices or affiliated corporate entities in Nebraska, has a
designated agent for service of process within the State of
Nebraska, has assigned employees or representatives to
conduct business in the State of Nebraska, sent
representatives to Nebraska for business purposes, solicited
business from consumers in Nebraska, or advertises within the
State. See Filing No. 201-1, Memorandum of Law,
attached Declarations of Joy Ho and George Huang.
opposition to the motions, the plaintiffs present evidence
that Lerado Holding is a publicly traded organization on the
Hong Kong Stock Exchange, and is, or was, the direct or
indirect parent of the remaining Lerado defendants.
See Filing Nos. 202, 203, and 204,
Corporate Disclosure Statements. The record shows the
defendant Lerado entities are incorporated in numerous
jurisdictions, including China, Bermuda, and the British
Virgin Islands. See Filing Nos. 134, 145, 178,
281, 282, Summonses Returned Executed. Lerado Holding is
the 100% parent company of Lerado Group, who is the 100%
parent company of Lerado China, who is the 100% parent
company of Lerado Zhong Shan, who was the manufacturing plant
for the subject car seat. Filing No. 368-1, Index of
Evid., Ex. B, Deposition of Kuang-Neng (Luke) Cheng as the
Rule 30(b)(6) designated representative of Lerado Holding
("Cheng Dep. 2") at 39-40.
2006, Lerado H.K. was an indirect subsidiary of Lerado Group.
See Filing No. 367-1, Index of Evid., Ex. A,
Deposition of Kuang-Neng (Luke) Cheng as the Rule 30(b)(6)
designated representative of Lerado Holding ("Cheng Dep.
1") at 28; Filing No. 373-7, Index of Evid.,
Ex. J, Organizational Chart at ECF pp. 4195-4200. The Lerado
manufacturing facility that produces car seats is located in
Zhong Shan, China. Filing No. 367-1, Index of Evid.,
Ex. A, Cheng Dep. 1 at 82; Filing No. 368-1, Index
of Evid., Ex. B, Cheng Dep. 2 at 89. Lerado admits that the
Zhong Shan manufacturing plant manufactured the subject
infant car seat. Filing No. 367-1, Index of Evid.,
Ex. A, Cheng Dep. 1 at 27; Filing No. 368-1, Index
of Evid., Ex. B, Cheng Dep. 2 at 105. Cheng testified that
the car seats were sold through Lerado China, Lerado Zhong
Shan's parent company, and that payments were made to
Lerado China. Filing No. 368-1, Index of Evid., Ex.
B, Cheng Dep. 2 at 44-46. He further testified that he was
unsure if the Lerado companies had common operations, and
wasn't sure if Lerado Zhong Shan works with Lerado H.K.
Id. at 42, 45. Lerado Holding is purely an
investment company, but it claims the group's list of
customers as its own. Filing No. 368-1, Cheng Dep. 2
at 33, 88. Cheng, who has worked for Lerado for 20 years,
also testified he did not know who paid his salary.
Filing No. 367-1, Index of Evid., Ex. A, Chen Dep. 1
at 17-18, 20.
Lerado Group and Baby Trend entered an Agreement for the
manufacture of the Baby Trend Car Seats in 2004. Filing
No. 373-6, Index of Evid., Ex. I, Agreement. Lerado
acquired liability insurance that covered North America as
required by the Agreement. Filing No. 368-1, Index
of Evid., Ex. B, Cheng Dep. 2 at 51, 53. The insurance was
acquired in the United States. Id.; Filing No.
377-1, Index of Evid., Ex. BB, Certificates of Insurance
and Binders. Cheng testified that Laredo Holding was aware of
the fact that it could be sued in the United States.
Filing No. 368-1, Index of Evid., Ex. B, Cheng Dep.
2 at 54. Lerado sold thousands of car seats in the United
States. Id. at 93-94. Id. at 54, 67. It
states in annual reports that the car seats are distributed
in the United States. Id. at 106-08. In 2006,
companies in the United States were Lerado's largest
customers. Id. Laredo also reported its potential
for liability to its shareholders in its 2014 Annual Report.
Id. at 101-02; Filing No. 375-2, Index of
Evid., Ex. O, Laredo Group (Holding) Company Limited 2014
has also been actively involved in producing its own branded
products for distribution nationwide under the name,
"Mia Moda." Filing No. 372-1, Index of
Evid., Ex. C, Deposition of Bradley Mattarocci, as Rule
30(b)(6) designate for defendant Baby Trend,
("Mattarocci Dep.") at 23. Lerado has been involved
in recalls in the United States. Filing No. 376-8,
Index of Evid., Ex. W, NHTSA Recall Notice; Filing No.
376-9, Index of Evid., Ex. X, Lerado Recall Spreadsheet;
Filing No. 376-12, Index of Evid., Ex. AA, NHTSA
Recall Information (showing 2009 nationwide recall of 5, 400
Mia Moda car seats for manufacturing defects); Filing No.
368-1, Index of Evid., Ex. B, Cheng Dep. 2 at 87. Lerado
sent employees to attend trade shows in the United States.
Filing No. 368-1, Ex. B, Cheng Dep. 2 at 12-14;
Filing No. 372-1, Index of Evid., Ex. C, Mattarocci
Dep. at 23.
the requirement of personal jurisdiction represents first of
all an individual right, it can, like other such rights, be
waived." Insurance Corp. of Ireland, Ltd. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694,
703 (1982); see Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 n. 14 (1985) (noting that
“the personal jurisdiction requirement is a waivable
right”). Under the Federal Rules, "[a] party
waives any defense listed in Rule 12(b)(2)-(5) [lack of
personal jurisdiction, improper venue, insufficient process,
and insufficient service of process] by: (A) omitting it from
a motion in the circumstance described in Rule
12(g)(2)." Fed.R.Civ.P. 12(h)(1)(A). Rule 12(g)(2)
provides that a party making a motion under Rule 12
“must not make another motion under this rule raising a
defense or objection that was available to the party but
omitted from its earlier motion.” Fed. R. Civ. P.
12(g)(2). If a party fails to raise a challenge to
personal jurisdiction in a preliminary Rule 12 motion or its
first responsive pleading, such challenge is forever waived.
See, e.g., American Ass'n of Naturopathic
Physicians v. Hayhurst, 227 F.3d 1104, 1106-07 (9th Cir.
2000) ("A fundamental tenet of the Federal Rules of
Civil Procedure is that certain defenses under Fed. R.
Civ. P. 12 must be raised at the first available
opportunity or, if they are not, they are forever
waived."); Glater v. Eli Lilly & Co., 712
F.2d 735, 738(1st Cir. 1983) ("It is clear under [Rule
12(h)(1)] that defendants wishing to raise any of these four
defenses must do so in their first defensive move, be it a
Rule 12 motion or a responsive pleading."); Myers v.
American Dental Asso., 695 F.2d 716, 721 (3d Cir. 1982)
("The federal rules single out four defenses which must
be raised by the defendant's initial responsive pleading
in order to be preserved . . . [u]nless the defendant objects
on those grounds at the outset, he forfeits his right later
to raise them as a defense"). Moreover, the filing of an
amended complaint does not revive a Rule 12(b)
defense that was previously waived. State Auto Ins. Co.
v. Thomas Landscaping & Constr., Inc., 494
F.App'x 550, 554 (6th Cir. 2012) (affirming lower
court's ruling that defendant waived personal
jurisdiction defense and could not raise it in response to
amended complaint); Pruco Life Ins. Co. v. Wilmington
Trust Co., 616 F.Supp.2d 210, 214 (D.R.I. 2009) (noting,
however, that an exception applies, however, when the
availability of a Rule 12 affirmative defense first reveals
itself through what is contained in an amended complaint).
rule that the defense of lack of personal jurisdiction is
waived if not made by motion or included in a responsive
pleading "'sets only the outer limits of waiver; it
does not preclude waiver by implication.'"
Yeldell v. Tutt, 913 F.2d 533, 539 (8th Cir. 1990)
(quoting Marquest Medical Prods. v. EMDE Corp., 496
F.Supp. 1242, 1245 n. 1 (D. Col. 1980). Asserting a
jurisdictional defect in the answer does not preserve the
defense in perpetuity. Id. The "defense
'may be lost by failure to assert it seasonably, by
formal submission ...