RALEIGH, N.C. (Legal Newsline) - The Alabama subsidiary of a Chinese aerospace company can be sued in North Carolina over the crash of a private airplane there, an appeals court ruled, citing a recent U.S. Supreme Court decision clarifying the extent of state court jurisdiction over out-of-state companies.
The estates of Debra Dee and Dennis Alan O’Neal sued Continental Motors Inc. after their single-engine Lancair LC42-550FG plane lost oil pressure and crashed near Winston-Salem, North Carolina. The plaintiffs blamed, among other things, a starter component that had been installed after the engine left Continental’s factory in Mobile, Ala.
Continental, a former Teledyne unit now owned by Aviation Industry Corporation of China, moved to dismiss the case for lack of personal jurisdiction, arguing it did no direct business in North Carolina and the crash couldn’t be attributed to anything it did in the state. After several years of litigation the trial court granted its motion in 2018.
The plaintiffs appealed to the North Carolina Court of Appeals, which in a Sept. 7 decision reversed the dismissal based on the Supreme Court’s March 2021 decision in Ford vs. Montana Eighth Judicial District Court.
In that decision, the Supreme Court upheld the jurisdiction of state courts over lawsuits over Ford cars that were manufactured elsewhere and only entered the states after being sold on the used-car market. Ford argued unsuccessfully that the underlying cases didn’t arise from anything it did in those states. The Supreme Court said it was enough that Ford did significant business, or made “purposeful availment” of the state’s automotive market.
Applying similar reasoning, the North Carolina Court of Appeals cited evidence that Continental Motors sold parts through North Carolina distributors and operated a website where customers could, for a subscription fee, obtain technical information about installing and maintaining Continental products.
“When considered with CMI’s other contacts `related to’ North Carolina and its `purposeful availment’ of our forum, these contacts are sufficient to support our holding of specific personal jurisdiction,” the appeals court ruled, in a decision by Judge Toby Hampson.
Judge John Tyson concurred in the decision, but noted that the Supreme Court’s evolving doctrine on personal jurisdiction leaves room for some companies to avoid being haled into state’s courts over anything that happens within its borders. A company’s contacts with the state must be more extensive than the mere fact its products wound up there or because it operates a website that North Carolina customers can access.
The appeals court upheld personal jurisdiction over a company that mailed out less than 2,000 catalogs to North Carolina customers and did about $12,000 in sales, for example. But the U.S,. Supreme Court rejected jurisdiction over a tire manufacturer who made its products in Turkey, never imported into the U.S., and was sued over a car accident in France.
Manufacturers typically try to avoid defending themselves in state courts, where the rules of procedure can be more flexible and plaintiff-friendly, and jurors might be inclined to order outsized damages from out-of-state companies.