This opinions will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Colie Gorton, Individually and as the Parent
and Natural Guardian of Jayson Gorton, a Minor,
Kristen Karen Nordlund, an Individual,
Dorel Industries, Inc., et al.,
Appellants and Third-Party Plaintiffs,
Ridgeview Medical Center, et al.,
Respondents and Third-Party Defendants.
Filed December 6, 2005
Carver County District Court
File No. CV03730
A. Rottier (pro hac vice), Habush Habush & Rottier S.C.,
J. Michael Dady, Erika N. Donner, Dady & Garner, P.A., 4000 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent Colie Gorton)
R. Schwegman, Quinlivan & Hughes, P.A.,
Mark A. Solheim, John M. Bjorkman, Charles A. Gross, Larson King, L.L.P., 2800 Wells Fargo Place, 30 East Seventh Street, St. Paul, MN 55101; and
H. Riley (pro hac vice), Schiff Hardin L.L.P., 6600
G. Vermeer, Gislason & Hunter, L.L.P.,
Considered and decided by Peterson, Presiding Judge; Halbrooks, Judge; and Wright, Judge.
U N P U B L I S H E D O P I N I O N
In this appeal from an order denying
their motions to dismiss for lack of personal jurisdiction, appellants Dorel
Industries, Inc. and
Gorton, who weighed less than 40 pounds, was restrained by a Grand Explorer
low-shield booster seat when he was injured in a two-vehicle accident while
riding in the rear seat of a car being driven by his father. The booster seat was purchased at a Target
Respondent Colie Gorton (Gorton), individually and as Jayson’s parent and natural guardian, brought this products-liability action against appellant Dorel Industries, Inc. (Dorel), appellant Dorel U.S.A., Inc. (Dorel U.S.A.), Dorel Juvenile Group, Inc. (DJG), and Cosco, Inc., alleging that the Grand Explorer provided inadequate upper-torso and head restraint for children weighing less than 40 pounds,
Dorel is a Canadian corporation with
its principal office in
brothers, Martin, Jeffrey, and Alan Schwartz, and their relative by marriage,
Jeff Segal, have served as Dorel directors since 1987. Martin Schwartz is Dorel’s president and
chief executive officer, Jeffrey Schwartz is Dorel’s chief financial officer,
and Alan Schwartz and Jeff Segal are executive vice presidents of Dorel. Martin and Jeffrey Schwartz are also Dorel
Dorel’s 2002 annual report states:
DOREL INDUSTRIES INC. is a global manufacturer of consumer products. It specializes in two market segments: juvenile products and home furnishings. Dorel’s extensive product offering includes juvenile products such as infant car seats, strollers, high chairs, toddler beds, cribs, infant health and safety aids, play-yards and juvenile accessories . . . .
employs approximately 4,500 people in fourteen countries. Major North American facilities are located
Dorel’s 2002 annual report also states, “We made a number of key moves this past year. During the second quarter a new president was named to head our largest division, the Dorel Juvenile Group USA.”
Industries’ goal is to be one of the premier consumer products companies in
North America and
Juvenile segment operates as the Dorel Juvenile Group (DJG) and comprises DJG
The annual report lists among Dorel’s
major operations DJG located at
Dorel’s 2002 renewal annual information form states:
Juvenile Products Segment manufactures and imports products such as infant car
seats, strollers, high chairs, toddler beds, playpens, swings and infant health
and safety aids. These products are
marketed under the brand names Cosco and Safety 1st in
. . . .
The Juvenile Products Segment accounted for 53% of Dorel’s sales in 2002. Sales of the Juvenile Products Segment were $528.4 million in 2002, compared to $503.9 million in 2001, representing an increase of 4.9%. The Juvenile Products Segment operating profit, before restructuring and other one-time charges, was $43.0 million in 2002 compared to $38.3 million in 2001, representing an increase of 12.1%. The Juvenile Products Segment’s success hinges on successful new product development and Dorel’s commitment to customer service.
. . . .
In 2002, Dorel had three major customers (Wal-Mart, K-Mart Corporation (“K-Mart”) and Toys “R” Us) each representing more then 10% of sales. These three major customers represented an aggregate of 68.5% of total sales in 2002 compared to 66.3% in 2001.
. . . .
Dorel’s relationships with Wal-Mart, K-Mart and Toys “R” Us has the additional benefit of providing Dorel with important feedback which it uses to improve its product offerings and to respond rapidly to changing market trends.
. . . .
Dorel is the sole owner of all patents and manufacturing licenses for its products.
Documents filed with the Bartholomew
County, Indiana, Recorder’s Office show that in 1990, a mortgage on Cosco
Cosco’s former CEO, Nick Costides,
who was named CEO of DJG in
When Costides left DJG, Dupuis assumed the role of interim president of DJG. Dorel announced the appointment of Bruce Cazenave as president and CEO of DJG effective May 1, 2002. Terry Emerson, DJG’s products-standards manager, testified in a deposition that Cazenave reported directly to Dupuis.
A September 2000 Dorel communiqué states:
Dorel Industries, Inc. . . . today announced it has signed a licensing agreement with Hasbro, Inc. to produce, market and distribute the popular Playskool brand of products, for the juvenile market in the U.S. and Canada.
Dorel’s wholly owned unit, Safety 1st will produce a Playskool product line consisting of feeding, teething, rattles, pacifiers, peg toys, bath accessories, bouncers as well as booster seats. . . .
. . . .
Dorel Industries, Inc. acquired Safety 1st in June 2000. Along with its other juvenile entity, Cosco, Inc., Safety 1st is now part of the newly formed Dorel Juvenile group.
The record contains evidence that Dorel has been involved with issues relating to car-seat warnings and government investigations: a 1995 letter from D.M. Dance, Occupant Protection Specialist, Road Safety and Motor Vehicle Regulation Directorate, Transport Canada, to David Hall of Dorel regarding Transport Canada’s investigation of the ejection of children in abdominal-shield booster cushions in motor-vehicle accidents, one of which was a Cosco booster cushion; a 1997 letter from Dance to Hall advising Hall that labeling on Cosco booster seats was not in compliance with safety regulations; a fax from Hall to Emerson stating that Hall would fill out forms required by Transport Canada regarding the noncompliance of the Cosco Adventurer booster cushion with safety regulations; a fax from Emerson to Hall about a labeling change on the Canadian units of the Grand Explorer booster seat; and a fax from Emerson to Liz Klaus of Dorel regarding suggested labeling changes for the Grand Explorer and Adventurer car seats.
On April 3, 2001, Dorel announced
that it had “agreed to a US $1.75 million settlement with the U.S. Consumer
Product Safety Commission (CPSC) to resolve issues relating to delayed
reporting of consumers’ complaints involving some of the products manufactured
by subsidiaries Cosco Inc. and recently acquired Safety 1st.” The settlement agreement identifies the parties
as the CPSC, Cosco, and Safety 1st and identifies Cosco and Safety 1st as
subsidiaries of Dorel
Dupuis stated in an affidavit: Dorel maintains a separate corporate existence from both Dorel U.S.A. and DJG, including separate corporate records and the observation of all corporate formalities required by law; Dorel does not control DJG’s day-to-day operational activities, including its designing, manufacturing, marketing, and distributing of child restraints; Dorel does not exercise day-to-day control over DJG’s personnel, accounting, or management operations; Dorel does not manufacture, design, advertise, market, package, sell, or distribute child restraints in Minnesota; Dorel does not operate any facilities that manufacture child restraints and does not employ engineers or designers who design or manufacture child restraints; and Dorel does not employ marketing or sales personnel for the purpose of marketing or distributing child restraints to retailers or the public in the United States.
Cazenave stated in an affidavit that Dorel U.S.A. maintains separate corporate records from DJG and observes all corporate formalities independent from DJG.
Dorel and Dorel
D E C I S I O N
Whether personal jurisdiction exists is a question of law which we review de novo. Once jurisdiction has been challenged by the defendant, the burden is on the plaintiff to prove that sufficient contacts exist with the forum state. At the pretrial stage, however, the plaintiff’s allegations and supporting evidence are to be taken as true.
Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 569-70 (
With respect to personal jurisdiction
over a nonresident parent corporation, the United States District Court for the
District of Minnesota has explained that a Minnesota “court may exercise
personal jurisdiction over a nonresident defendant if there exist ‘minimum
contacts’ between the defendant and the state of Minnesota.” Scott
v. Mego Int’l, Inc., 519 F. Supp. 1118, 1125 (D. Minn. 1981) (quoting World-Wide Volkswagen Corp. v. Woodson,
A nonresident parent corporation may subject itself to jurisdiction in a state by virtue of the activities of its subsidiary company in that state. In order for the parent company to subject itself to jurisdiction by virtue of its subsidiary’s activities, the companies must be organized and operated so that the one corporation is an instrumentality or adjunct of the other corporation.
Scott, the Minnesota District Court
concluded that it has personal jurisdiction over Dorel and Dorel
Defendant Mego International, Inc. [the parent corporation] conducts business through its wholly-owned subsidiaries which are closely interrelated. Mego International maintains offices at the same location as defendant Mego [the subsidiary corporation]. Both of the directors of Mego are also directors of Mego International. A number of the same people are officers of both corporations. Mego International and its subsidiaries issue consolidated summaries of operations, financial statements, statements of income, statements of changes in financial position, and statements of shareholders’ equity. Mego International and the domestic subsidiaries file consolidated federal income tax returns, and Mego International guarantees the credit facility of its domestic subsidiaries and funds their pension plans.
International holds itself out to the public as having substantial control over
its subsidiaries, including Mego, and its annual report and other financial
documents reveal that it does, in fact, have such control. The parent-subsidiary relationship appears to
be a convenient means for Mego International to organize its domestic and
international business. The Mego
International prospectus indicates that Mego International was incorporated
“for the purpose of continuing in one venture the business and management of
Mego Corp., a
Scott is consistent with the policy of asserting personal jurisdiction to the full extent of federal due process and is also consistent with the analysis applied by this court in Wicken v. Morris, 510 N.W.2d 246, 249 (Minn. App. 1994), rev’d on other grounds, 527 N.W.2d 95 (Minn. 1995). In Wicken, this court stated:
In International Shoe, the United States Supreme Court dispensed with the notion of presence within a state as a test for personal jurisdiction; instead, the Court adopted a flexible “doing business” standard to determine whether a party’s contacts with a state satisfy due process requirements. Before International Shoe, the Supreme Court had indicated in Cannon Mfg. v. Cudahy Packing Co. that jurisdiction could not be exercised over a nonresident parent corporation with a forum state subsidiary when the parent and subsidiary had separate existences.
The Cannon rule had validity when the focus was on the presence of a business in a state. With the advent of International Shoe and a focus on minimum contacts, however, the justification for the Cannon rule lost support. Under International Shoe, it makes sense to go beyond corporate form to consider the nonresident parent corporation’s contacts to determine whether due process requirements are satisfied.
510 N.W.2d at 249 (citations omitted).
argue that Keeton v. Hustler Magazine,
Furthermore, in Keeton, the Supreme Court explicitly recognized that New Hampshire, like Minnesota, “has adopted a ‘long-arm’ statute authorizing service of process on nonresident corporations whenever permitted by the Due Process Clause” 465 U.S. at 774, 104 S. Ct. 1478, and in analyzing personal jurisdiction, the Supreme Court applied due-process principles, rather than rules of corporate law.
agree with the district court that respondent has made a prima facie showing
that Dorel and Dorel
viewed in their entirety, these activities, like the activities of the
corporations in Scott, indicate that
although Dorel, Dorel U.S.A., and DJG are separate corporations, their business
operations are interrelated, and the actual production and distribution of
child booster seats is accomplished through these interrelated business
operations. In light of the
relationships among the corporations, it does not offend traditional notions of
fair play and substantial justice for a
 Appellants note in their brief that in the district court, Dorel Industries Inc. was erroneously identified as Dorel Industries, Inc. Appellants have not sought leave of the appellate court to have this error corrected. See Minn. R. Civ. P. 60.01 (during pendency of appeal, errors in record arising from oversight or omission may be corrected with leave of appellate court).
 Gorton also sued the driver of the other car, Kristen
Karen Nordlund, for negligence.
Appellants and DJG filed a third-party complaint against