United States: "But For" Personal Jurisdiction

Last Updated: June 20 2019
Article by Michelle Yeary

Personal jurisdiction being a key issue for us here at DDL Blog, we've talked a lot about the "minimum contacts" needed to establish jurisdiction over an out-of-state defendant. Not many cases, however, analyze the two specific jurisdictional tests for minimum contacts. That's likely because in most cases, it doesn't make a difference whether you use the "but for" or the "proximate cause" test. Except when it does.

Lynch v. Olympus America, Inc., 2019 WL 2372841 (D. Col. Jun. 5, 2019) is such an exception. The court was ruling on the Japanese defendant's motion to dismiss for lack of personal jurisdiction and all defendants' motions to dismiss for failure to state a claim. This is the second go-round on these motions. The first set of motions on the original complaint were granted seven months ago, with leave to amend. Following the filing of an amended complaint and some limited jurisdictional discovery, defendants renewed their motions and this time they were denied.

Plaintiff underwent an endoscopy for which her doctor used defendants' scope. Following surgery, plaintiff developed an infection. She alleges the scope was defective because as designed it could not be cleaned properly to eliminate contaminates from prior procedures. Id. at *1. The amended complaint also now alleges that (i) Olympus Medical, the Japanese defendant, had contact with a Colorado doctor who served as an evaluator of defendant's prototype devices, (ii) plaintiff's doctor was invited to and visited Olympus Medical in Japan, (iii) Olympus Medical's representatives traveled from Japan to Colorado and met with plaintiff's doctor and others to "enhance the doctors' loyalty" and "boost sales," and (iv) an Olympus Medical employee attended a seminar in Colorado where its products were demonstrated. Id. at *6.

The personal jurisdiction question before the court was whether those allegations satisfied the minimum contacts requirements – did they demonstrate that the defendant "purposefully directed its activities at residents of the forum state" and did "the plaintiff's injuries [ ] arise out of the defendant's forum-related activities." Id. at *6. The allegations show activities directed to Colorado residents. At issue was "whether those contacts are adequately related to the claims at issue, whether [p]laintiff's injuries arose from those contacts." Id. at *7. There are two different tests that courts use when faced with this issue. "Proximate cause" is the more stringent of the two tests requiring a plaintiff to establish both cause in fact ("but for" cause) and legal cause – that the defendant's contacts with the state "gave birth to the cause of action." Id. "The proximate cause test is just what it sounds like – a requirement that defendant's contacts with the forum are the proximate cause of the resulting harm. Id. at *7. Where the "but for" test only requires a showing that "but for defendant's contacts with the forum, plaintiff would have suffered the injury at issue." Id. at *6. "[A]ny event in the causal chain leading to the plaintiff's injury is sufficiently related to the claim to support the exercise of specific jurisdiction." Id. at *8.

In addressing what test to use for this analysis, the Tenth Circuit specifically left the question open, finding that in the cases before it it was unnecessary to decide the issue. Id. at * 6. Not so for the Lynch court. Starting with proximate cause, the court applied the facts (as alleged). Of the four "contacts" enumerated above, the court found that item (ii) was not to be considered for personal jurisdiction because traveling to Japan was an "out of state" contact. The contact must be with the forum itself, not with people who reside there. Id. at *8. With respect to the rest of the in-state contacts, none were tied to the alleged design defect at issue in the case. Therefore, plaintiff's injury did not arise out of Olympus Medical's contacts with Colorado and personal jurisdiction could not be found under the proximate cause test. Id.

But, the "but for" test is "significantly less demanding." Id.

The less restrictive but-for standard permits the court to focus not on the issue of whether Olympus Medical's Colorado contacts were proximately related to the challenged design of the scope, but rather on the issue of whether Olympus Medical's actions directed at Colorado were for the purposes of developing and promoting the use [of the scope] by physicians and patients in Colorado.

Id. The court found plaintiff's allegations sufficient to demonstrate that Olympus Medical's contacts with Colorado were for the purposes of promoting its devices, including the one at issue, and "cultivating the relationship" with doctors, including plaintiff's own physician. Id. at *9. That showing was sufficient to satisfy the "but for" test and establish personal jurisdiction.

Interestingly, the court never directly decides which test should be applied. Instead, it concludes that because "there are sufficient minimum contacts to support personal jurisdiction under at least one of the available tests," that is enough. Id. at *10 (emphasis added). But isn't that like starting with the answer you want – sufficient contacts – and working backwards to find the question that gets you there? Or, doesn't it simply negate the proximate cause test? If failing the harder test and passing the easier test means you pass – why use the harder test at all? And it's not like if you fail "but for" you are somehow going to pass "proximate cause." We don't see Lynch as really clearing up the fundamental question of which test should be applied.

After resolving the minimum contacts question, the court did go on to address "fair play and substantial justice." Defendant argued that the burden Olympus Medical would face litigating in Colorado offended those concepts. Id. at *10. But the most significant burden the court identified was the expense of translating documents – and that's a burden for plaintiff, not defendant. Id. at *12. So, that's a little silver lining for defendants. If you're interested in more on translation burden, see our post here.

As we mentioned earlier in this post, all of defendants' substantive motions were also denied. The amended complaint states claims for design defect, warning defect, fraud and misrepresentation. Id. at *11-18. We won't belabor those rulings here. But we do note that the court applied the learned intermediary rule to medical devices. Id. at *14. And, in dictum, suggested that Colorado's heeding presumption may not apply to medical devices. Id. at *18n.7.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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