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Law School Case Brief

McBead Drilling Co. v. Kremco, Ltd. - 509 So. 2d 429 (La. 1987)

Rule:

The foreseeability that is critical to due process analysis of personal jurisdiction is not the mere likelihood that a product will find its way into the forum state. Rather, it is that a defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.

Facts:

The parties were foreign corporations, who entered into an agreement for the sale of an oil rig. Defendant seller obtained the basic rig from another company and added modifications to comply with the purchaser's specifications. The oil rig was delivered to the purchaser, who moved it to a parish in Louisiana. Defendant's employee came to the parish site to make adjustments. The oil rig collapsed, and the purchaser filed its action for damages. Defendant filed exceptions based on personal jurisdiction. The district court held that jurisdiction was not proper over defendant because it did not do or solicit business in Louisiana or derive substantial revenue from Louisiana. The purchaser appealed and the appellate court held that while the manufacturing provision of the Long-Arm Statute, La. Rev. Stat. Ann. § 13:3201(8), applied retroactively, jurisdiction over defendant violated due process. The purchaser appealed.

Issue:

Did the exercise of personal jurisdiction by the state of Louisiana over a nonresident seller violate the Due Process Clause?

Answer:

No.

Conclusion:

The court reversed. The court agreed that § 13:3201(8) applied to defendant but distinguished defendant's circumstances from recent federal jurisprudence. Jurisdiction was proper because defendant could reasonably anticipate being brought into court in Louisiana.

Consideration of the relationship among the defendant, the forum, and the litigation could lead one to reasonably conclude that it is basically unfair to hold a local retail dealer subject to personal jurisdiction in a remote state on a product liability claim relating to design or manufacturing defects. But one could also reasonably conclude on the same considerations that fairness and substantial justice do not preclude subjecting the manufacturer to jurisdiction wherever the product causes damages because of design or manufacturing defects. 

Here, defendant seller of the component parts of an allegedly defective rig sold it to an Arkansas drilling company, which was located in the Ark-La-Tex triangle of oil drilling activity. Thus, unlike other recent Supreme Court caselaw, not only were there significant affiliating circumstances established in this case, but also the defendant's conduct in its business operations and the nature of the manufactured product were such that it should have reasonably anticipated being haled into court in Louisiana if the product caused damages because of design or manufacturing defects. Exercise of personal jurisdiction under these circumstances did not violate the Due Process clause, the purpose of which is to protect persons against unfair or arbitrary treatment at the hands of the government. 

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