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Keralink International, Inc. v. Stradis Healthcare, LLC

United States District Court, D. Maryland

December 26, 2018

KERALINK INTERNATIONAL, INC.
v.
STRADIS HEALTHCARE, LLC

          MEMORANDUM

          CATHERINE C. BLAKE UNITED STATES DISTRICT JUDGE.

         Currently pending before the court is a motion to dismiss for lack of personal jurisdiction filed by third-party defendant Kareway Product, Inc. ("Kareway"). This dispute arises between KeraLink International, Inc. ("KeraLink"), a Maryland corporation and Stradis Healthcare, LLC ("Stradis"), a Georgia corporation. After suit was initiated, Stradis moved to join Kareway, a California corporation, as a third-party defendant. Stradis also moved to join Insource, Inc. ("Insource") and Geri-Care Pharmaceuticals Corporation ("Geri-Care") as third-party defendants. Neither Insource nor Geri-Care joined Kareway in this motion to dismiss. For the reasons outlined below, Kareway's motion to dismiss for lack of personal jurisdiction will be granted. The issues have been briefed and no oral argument is necessary. See Local Rule 105.6 (D. Md. 2018).

         BACKGROUND

         KeraLink, a national network of eye banks, is headquartered in Baltimore, Maryland. (Third-party Compl. ¶¶ 1, 12, ECF No. 10). KeraLink recovers and distributes ocular tissue for use in corneal transplants. (Id. ¶ 14). KeraLink purchases the medical supplies it needs to preserve and distribute ocular tissue from various vendors. (Id. ¶ 15). Stradis, one of KeraLink's vendors, provides KeraLink with surgical packs. (Id. ¶ 16). These packs contain all the supplies recipient hospitals and physicians need to perform a corneal transplant. (Id. ¶ 15).

         This litigation arises from the inclusion of contaminated sterile eye wash ("GeriCare Eye Wash") in sterile surgical packs KeraLink purchased from Stradis. (Id. ¶¶ 18-21). On October 27, 2017, the Eye Bank Association of America notified its members that batches of GeriCare Eye Wash may be contaminated by bacteria. (Id. ¶ 20). Federal regulations prohibit the use of contaminated ocular tissue. (Id. ¶ 21). KeraLink, therefore, quarantined ocular tissue that had been recovered using GeriCare Eye Wash. (Id.). All told, KeraLink could not use 61 live-cell tissues and 860 long-term tissues that had been exposed to GeriCare Eye Wash. (Id. ¶ 22). KeraLink also could not use 182 sterile surgical packs that it had previously purchased from Stradis that contained GeriCare Eye Wash. (Id. ¶ 23). In total, KeraLink alleges that it has sustained no less than $600, 000.00 in damages. (Id. ¶ 26).

         On January 29, 2018, KeraLink learned that Kareway, a California corporation, was the source of the affected GeriCare Eye Wash. (Id. ¶¶ 3, 24).[1] KeraLink brought a claim against Stradis. (Id. ¶ 25; ECF No. 1). Stradis subsequently sought to join Kareway as a third-party defendant. (ECF No. 10).

         STANDARD OF REVIEW

         "When personal jurisdiction is properly challenged under Rule 12(b)(2), the jurisdictional question is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence." Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citing Mylan Labs., Inc. v. Akzo, N. V., 2 F.3d 56, 59-60 (4th Cir. 1993)). If the court resolves the personal jurisdiction question-without an evidentiary hearing, "the plaintiff need only make a prima facie showing of personal jurisdiction." Carefirst, 334 F.3d at 396 (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). In assessing whether the plaintiff has carried this burden, the court resolves all disputed facts and reasonable inferences in the plaintiffs favor. Carefirst, 334 F.3d at 396 (citing Mylan Labs., 2 F.3d at 60).

         ANALYSIS

         A court may exercise personal jurisdiction over a nonresident defendant if the state's long-arm statute grants jurisdiction and the exercise of jurisdiction would not contravene the Due Process Clause. Carefirst, 334 F.3d at 396. Maryland's long-arm statute is coextensive with "the limits of personal jurisdiction set by the due process clause of the Constitution." Id. The court's statutory inquiry therefore merges with the court's analysis of the Due Process Clause. Id. Because the court finds that the exercise of personal jurisdiction over Kareway would offend the Due Process Clause, the court need not resolve whether § 6-103(b)(4) of Maryland's long-arm statute would grant jurisdiction. Md. Code Ann., Cts. & Jud. Proc. § 6-103(b)(4).[2]

         Consonant with the Due Process Clause, the court may exercise personal jurisdiction over a nonresident defendant if the defendant has sufficient "minimum contacts" with the forum so that haling the defendant to court in the forum state "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The standard for the court's exercise of personal jurisdiction varies based on whether the defendant's contacts with the forum state are the genesis of the cause of action. Carefirst, 334 F.3d at 397. If the suit arises out of the defendant's contacts with the forum state, the court may exercise specific jurisdiction. Id. To determine whether specific jurisdiction exists, the court considers: "(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the forum state; (2) whether the plaintiffs claims [arose] out of those activities; and (3) whether the exercise of personal jurisdiction is constitutionally reasonable," Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 559 (4th Cir. 2014) (citing Tire Eng'g v. Shandong Linglong Rubber Co., 682 F.3d 292, 301-02 (4th Cir. 2012)). If, however, the defendant's contacts with the forum state do not give rise to the cause of action, the plaintiff must show that the court has general jurisdiction over the defendant. Id. General jurisdiction is appropriate when the defendant's contacts with the forum state are so "continuous and-systematic" as to as to "render [the nonresident defendant] essentially at home in the forum State." Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). The court considers specific and general jurisdiction in turn.

         Stradis makes three principal arguments in support of the court's exercise of specific jurisdiction over Kareway. First, Kareway designed GeriCare Eye Wash and placed it into the stream of commerce with the intention or expectation that it would reach Maryland. (Mem. P. & A. Opp'n Kareway's Mot. Dismiss ["Stradis's Opp'n"] at 2, 5-6, ECF No. 23). Second, Kareway sells many of its products through national retailers, such as Amazon and Wal-Mart, that have a presence in Maryland. (Id. at 6-7). Third, Kareway's website is available to Maryland customers. None of Stradis's arguments are convincing. (Id.).

         A majority of the Supreme Court has yet to agree on the circumstances in which a stream-of-commerce theory may support specific jurisdiction. See J. McIntyre Mach., Ltd v. Nicastro, 564 U.S. 873 (2011) (no controlling opinion); ALS Scan, Inc. v. Digital Service Consultants, Inc., 293 F.3d 707, 713 (4th Cir. 2002). But it is clear that a court may only exercise specific jurisdiction over a nonresident defendant who "purposely availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958); see McIntyre, 564 U.S. at 877 (plurality opinion) (citing Hanson, 357 U.S. at 253); see McIntyre, 564 US. at .889 (Breyer, J., concurring in judgment). Merely placing a product into the stream of commerce, even if it is foreseeable that the product will end up in the forum state, is not enough. See McIntyre, 564 U.S. at 877 (plurality opinion); id at 888-89 (Breyer, J., concurring in judgment); see also ESAB Group, Inc. v. Zurich Ins. PLC, 685 F.3d 376, 392 (4th Cir. 2012).

         Stradis has not sufficiently alleged that Kareway targeted Maryland or that "something more" than mere foreseeability evidenced Kareway's purposeful availment of the privilege of conducting business in Maryland. McIntyre, 564 U.S. at 882, 889. Stradis does not contest that GeriCare Eye Wash was both produced and sold to Stradis outside of Maryland. (Mem. P. & A. Supp. Kareway's Mot. ["Kareway's Mot"] at 3, ECF No. 19-1; Hong Aff. ¶¶ 4-6, ECF No. 19-2). In fact, Stradis has not contested Kareway's assertion that Kareway sold the GeriCare Eye Wash to Geri-Care in New York, which then sold the eye wash to Stradis. (Hong Aff. ¶¶ 4-6). And, Stradis has presented no evidence that Kareway specifically directed the sale of GeriCare Eye Wash to Maryland consumers. Instead, Stradis's arguments focus predominately on the sale of other Kareway products-none of which are related to the current litigation-within Maryland. (Stradis's Opp'n at 6-7). Specific jurisdiction exists only when the litigation arises out of defendant's contacts with the forum, state. Bristol-Myers Squibb Co. v. Superior Court ofCalifornia,137 S.Ct. 1773, 1781 (2017) (holding that when there is no connection between defendant's contact with the forum state and the underlying controversy, specific jurisdiction does ...


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