Camelback Ski Corp. v. Behning

McAULIFFE, Judge. In Camelback Ski Corp, v. Behning, 307 Md. 270 , 513 A.2d 874 (1986) (Camelback I), we held that the Due Process ³³³ Clause of the Fourteenth Amendment precluded a Maryland court from exercising personal jurisdiction over the operator of a Pennsylvania ski resort under the particular facts of that case. Thereafter, the United States Supreme Court granted Respondents’ petition for a writ of certiorari, and by summary order vacated the judgment and remanded the case to this Court for further consideration in light of Asahi Metal Industry Co., Ltd. v. Superior Court of California, — U.S.-, 107 S.Ct. 1026 , 94 L.Ed.2d 92 (1987), a case decided one week earlier. Behning v. Camelback Ski Corporation, — U.S. -, 107 S.Ct. 1341 , 94 L.Ed.2d 512 (1987).

With the benefit of additional briefing and oral argument, we have reconsidered the case, and now affirm our earlier determination. We reproduce from our earlier opinion a summary of the basic facts of this case: Ralph Behning, a Maryland resident, suffered severe and permanent injuries in February, 1980, when he fell while skiing at Camelback, a ski resort owned and operated by Camelback Ski Corporation (Camelback) and located in the Poconos mountains of Pennsylvania. In October, 1982, Behning and his wife sued Camelback in the Circuit Court for Baltimore County, claiming damages for alleged negligence of Camelback in the design, construction, maintenance, and “grooming” of one of its ski slopes, and in the failure to correct, or give adequate warning of, an unreasonably dangerous condition on the land. Camelback is a Pennsylvania corporation with no charter or license to do business in Maryland, and no agent for service of process in this State.

No bank accounts or telephone listings are maintained by Camelback in Maryland, and no taxes are paid to this State. Camelback sells no products here and derives its total income from its ski resort in Pennsylvania. Camelback I, supra, 307 Md. at 272, 280 . 513 A.2d 871 . ³³⁴ Camelback also sought to purchase toll-free telephone numbers solely for its marketing area states, but found that service for Maryland was necessarily included in the package it was required to buy. Camelback included the Maryland toll-free number on its brochures, but it did not generally or systematically distribute its brochures in this State. 1 Camelback is principally a “day” 2 resort, although it does receive some “destination business.” Its market area, to which it devotes one hundred percent of its advertising budget, is comprised of those parts of Pennsylvania, New York, and New Jersey lying within a 100-mile radius of the resort.

On one occasion in 1982, for a period of one or two days, a sales representative of Camelback called on travel agencies and military installations in Maryland, in an attempt to stimulate mid-week destination business. This effort was unsuccessful, and was not repeated. Camelback was aware that some of its customers came from Maryland. The record does not disclose what percentage of Camelback’s customers were from this State, or whether Camelback had any means of obtaining information concerning the State of residence of its customers.

Behning’s trip to Camelback did not result from any solicitation by Camelback within this State. Asahi Metal Industry Co. Ltd. v. Superior Court, supra, was a successful challenge to a California state court’s exercise of personal jurisdiction in a controversy that ultimately involved only Japanese and Taiwanese corporations. The action was initiated by a California resident who was ³³⁵ injured as the result of a motorcycle accident. Alleging that the accident was caused by a sudden loss of air from the rear tire of his motorcycle, the plaintiff sued, among others, Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin), the Taiwanese manufacturer of the tire tube.

Cheng Shin in turn filed a complaint for indemnification against Asahi Metal Industry Co. Ltd., (Asahi), the Japanese manufacturer of the tube’s valve assembly. Asahi moved to quash service of Cheng Shin’s summons, arguing that California could not exercise jurisdiction over Asahi consistent with the Due Process Clause of the Fourteenth Amendment. Asahi’s motion was considered after all claims other than that of Cheng Shin against Asahi had been resolved. The facts show that Asahi manufactured valve assemblies in Japan and sold them to Cheng Shin, among others.

Cheng Shin accepted delivery of the valve assemblies in Taiwan, and there manufactured the finished tube. Cheng Shin purchased valve assemblies from other suppliers as well, and sold finished tubes throughout the world. Although Asahi had no control over Cheng Shin’s system of distribution, there was evidence that Asahi knew that some of the valve assemblies sold to Cheng Shin would be incorporated into tire tubes which would ultimately be sold in California. The Supreme Court analyzed the facts of Asahi with respect to two separate but related questions.

First, the Court considered, and divided sharply on, the question of whether Asahi had sufficient contacts with California to justify that State’s assumption of personal jurisdiction over this type of claim. Second, the Court considered whether, under all the circumstances, assumption of jurisdiction by the State court would offend traditional notions of fair play and substantial justice. Eight justices, after considering the factors set forth in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 , 100 S.Ct. 559 , 62 L.Ed.2d 490 (1980), agreed that even if the threshold test of minimum contacts had been met, the exercise of jurisdiction would not be fair or reasonable. ³³⁶ Considering the international context, the heavy burden on the alien defendant, and the slight interests of the plaintiff and the forum State, the exercise of personal jurisdiction by a California court over Asahi in this instance would be unreasonable and unfair. Asahi, supra, 107 S.Ct. at 1035.

The specific holding of Asahi has no direct impact on our decision in this case. Asahi is “one of those rare cases” in which traditional notions of fair play and substantial justice defeat the reasonableness of jurisdiction even though the threshold requirement of minimal contacts may have been met. 107 S.Ct. at 1035 (Brennan, J., concurring in part). We held in Camelback I that there were insufficient contacts to satisfy the threshold test of jurisdiction. Although we did not specifically address the second and more general test of essential fairness under all the circumstances, we noted that several of the factors applied in that analysis militated in favor of the exercise of jurisdiction.

We stated, however, that those factors “cannot alone serve as the foundation for assumption of jurisdiction.” Camelback I, 307 Md. at 286 , 513 A.2d 874 . We turn, then, to the Supreme Court’s extensive discussion of what is ordinarily the first question in personal jurisdiction cases 3 —the nature and extent of contacts that must be shown between the forum and the defendant to satisfy the threshold demands of fairness. Asahi may be characterized as a “stream of commerce” case. It involves a manufacturer placing a component part into the stream of commerce, and an allegation that a consumer of the product was injured because the component was unreasonably dangerous when sold. ³³⁷ Four justices were of the opinion that if there exists a “regular and anticipated flow of products from manufacture to distribution to retail sale,” a participant in that process who “is aware that the final product is being marketed in the forum State” has sufficient contacts with the forum to satisfy the threshold jurisdictional inquiry. 107 S.Ct. at 1035 (Brennan, J., concurring in part).

The rationale of that position is that “[a] defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State’s laws that regulate and facilitate commercial activity.” Id. Participation in an ongoing stream of commerce with full awareness of ultimate sales in the forum State is therefore considered to be an “act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State,” thus satisfying the test of Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 , 105 S.Ct. 2174, 2183 , 85 L.Ed.2d 528 (1985), and Hanson v. Denckla, 357 U.S. 235, 253 , 78 S.Ct. 1228, 1239 , 2 L.Ed.2d 1283 (1958). Four other justices were of the opinion that simply placing a product into the stream of commerce under circumstances where it was foreseeable that sales would result in the forum jurisdiction did not satisfy the threshold requirement of sufficient contacts. The plurality said: The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State.... [A] defendant’s awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.

Asahi, supra, 107 S.Ct. at 1033. The ninth justice, Justice Stevens, eschewed any need to articulate in Asahi a test to be applied in stream-of-commerce cases, but added that even if something more than “mere awareness” is needed to constitute “purposeful availment,” the Asahi corporation’s activities may have satisfied ³³⁸ the required higher quantum of conduct. 4 107 S.Ct. at 1038. The case before us is neither a product liability case, nor a conventional stream-of-commerce case. As the Behnings point out, however, this case shares at least one very important feature of the stream-of-commerce cases—the defendant knowingly and regularly derives economic benefit from the business of residents of the forum State.

The Behnings correctly assert that forcing all cases into a rigid classification as either “general jurisdiction” or “specific jurisdiction” cases, and then mechanically applying a fixed standard for the quantum of contacts required to support personal jurisdiction in each class, would be inappropriate. We agree that the quality and quantity of contacts required to support the exercise of personal jurisdiction will depend upon the nature of the action brought and the nexus of the contacts to the subject matter of the action. We further agree that the spectrum of cases may be generally divided into those involving general jurisdiction (the cause of action is unrelated to the contacts), and those involving specific jurisdiction (the cause of action arises out of the conduct which constitutes the contacts). Generally speaking, when the cause of action does not arise out of, or is