Taylor v. CSR LTD.

ADKINS, J. The estates of two stevedores alleged to have contracted cancer from exposure to asbestos while unloading bags of asbestos at the Port of Baltimore, appeal the dismissal of their claim for a lack of personal jurisdiction against an Australian company. CSR Limited, d/b/a Colonial Sugar Refining Co., Ltd. (“CSR”), appellee, is an Australian corporation alleged to have shipped bags of asbestos fiber to the Port of Baltimore at the time Alfred B. Smith and Joseph Anzulis worked there as stevedores. Andrea Taylor, personal representative for the Smith estate, and Mary Fuchsluger, personal representative for the Anzulis estate, present the following question for our review: Did the trial court err as a matter of law in granting CSR’s motion to dismiss for lack of personal jurisdiction? Viewing the evidence in the light most favorable to appellants, we conclude that appellants made a prima facie case that CSR has sufficient contacts in Maryland to support personal jurisdiction for these causes of action. ³⁶⁸ FACTS AND LEGAL PROCEEDINGS The estates (hereinafter together referred to as “Taylor”), sued several corporate entities including CSR, alleging that Smith and Anzulis, while working as stevedores at the Port of Baltimore, were exposed injuriously to asbestos fibers exported by CSR while offloading bags containing asbestos.

Taylor maintains that as a result of this off-loading, Smith and Anzulis contracted mesothelioma, a cancer caused by exposure to airborne asbestos fiber. Taylor alleges multiple causes of action, including strict liability, breach of warranty, negligence, and fraud. Taylor alleges that CSR operated an asbestos mine through a wholly owned subsidiary, Australia Blue Asbestos Pty. Limited (“ABA”), and CSR, as the mine’s exclusive distributor, exported asbestos fiber for sale to customers in the United States, particularly Johns-Manville International. 1 CSR is alleged to have made such exports from 1943 to 1966, with some of the shipments passing through the Port of Baltimore.

Smith and Anzulis worked at the Port unloading cargo from approximately 1942 through 1983 and 1937 through 1973, respectively. Lloyd M. Gardner, Sr., a co-worker of Smith and Anzulis, stated in an affidavit that he unloaded, among other various cargos, thousands of burlap bags containing loose asbestos, shipped to Baltimore from foreign ports. According to Gardner, he unloaded shipments of asbestos from Australia up to six times a year in the 1950s and 60s, and some of these bags had a diamond-shaped logo on them with the letters “CSR.” Gardner also testified in a deposition that the offloading of the bags produced dust. Gardner remembers Smith and Anzulis being present when the dust-producing work took place.

William Gardner, Lloyd Gardner’s brother and a stevedore who worked at the Port from 1961 until 1970, also indicated in deposition testimony that he recalled unloading CSR-labeled burlap bags containing asbestos, that dust ³⁶⁹ would be “all over the placet,]” and that Smith and Anzulis were present during these unloading jobs. From 1943 to 1966, CSR owned a subsidiary, ABA, that mined and packaged crocidolite asbestos in Western Australia. During that time, CSR functioned as ABA’s agent for asbestos fiber sales to customers in the United States. In addition to its asbestos export activities, CSR was involved in the sugar refining and export business.

CSR had an agreement with the state of Queensland, Australia, to market all Australian exports of raw sugar, including the arrangements for sale, transport, insurance and financing. 2 Maryland Port Authority statistics indicate that during the years of 1964 through 1966, approximately 82,847 tons of raw sugar were imported to the Port of Baltimore from Australia having a total value of $10,921,373, a value in 2005 dollars of over $66.5 million. On October 10, 2005, CSR filed a motion to dismiss Taylor’s complaint against CSR on the ground that Maryland does not have personal jurisdiction. In an affidavit, Edwin Anthony Smith, manager of CSR’s Group Financial Reporting, 3 stated ³⁷⁰ that CSR has never been incorporated or licensed to do business in Maryland, nor has it ever appointed an agent for purposes of accepting service of process in Maryland. According to Smith, CSR has never conducted or solicited any business in Maryland; has never had any employees or agents based or residing in the state; has never maintained an office, telephone listing, mailing address or bank account in Maryland; and has never owned, leased, or possessed any interest in real or personal property in the state.

Smith asserts that CSR has never conducted an asbestos-related business in Maryland, has never been a party to any contract in the state, and has not been required to perform any contract in the state. Smith also states that CSR has never manufactured, produced, merchandised, marketed, supplied, distributed, sold or installed asbestos products in Maryland. According to Smith’s understanding, the purchaser of asbestos fiber was “basically responsible for it” when it left the port in Australia and where it went “was dictated by the purchaser.” In opposition to CSR’s motion to dismiss, Taylor provided as exhibits four invoices, indicating CSR shipments of asbestos fiber from Australia to the Port of Baltimore during the period of time in which Smith and Anzulis worked as stevedores. 4 Taylor also provided an affidavit of Captain Robert Stewart, a maritime expert, indicating that three of the four invoiced shipments were made pursuant to “C.&.F./C.I.F.” shipping contracts, short for “Cost and Freight[,]” in which CSR, as the “seller/shipper/consignor” of the asbestos fiber, was obligated to package and mark the asbestos fiber, identifying the contents and port destination; prepare an invoice; contract for marine insurance; obtain necessary shipping documents, such as export licenses; pay all freight charges to the carrier, ³⁷¹ including costs associated with hiring a stevedore company to unload the cargo; obtain a clean negotiable bill of lading, covering the transportation to Baltimore; and remain responsible for the cargo until it arrived and was unloaded in Baltimore, at which time the buyer accepted the cargo. Stewart also indicated that under C.&.F. or CIF agreements, CSR would have access to Maryland courts if any of the buyers wrongly failed to accept the asbestos shipments upon delivery in Baltimore.

According to Stewart, the terms of the four invoices indicate that the shipments cumulatively weighed over 1.2 million pounds, consisting of 13,332 individual bags of asbestos fiber. 5 Taylor also provided the court with an affidavit of Dr. Barry Castleman, an environmental consultant with expertise regarding the history of the asbestos industry and development of knowledge of asbestos disease and worker health. Castle-man provided his opinion that from 1943 to 1966, CSR would have known that burlap bags containing asbestos fiber from ABA’s mine in Western Australia were handled and unloaded by stevedores at various ports and that such bags would often break, tear, or be punctured, thereby exposing stevedores and others to airborne asbestos. Castlemen also stated that CSR regularly advertised the sale of ABA asbestos, from approximately 1942 through 1966, in Asbestos, a trade magazine of the United States asbestos industry. From 1954 to 1966, CSR placed advertisements in Asbestos issues every other month.

Castlemen opined that CSR would have known that its marketing in Asbestos would have reached Maryland consumers, such as Porter Hayden and Wallace and Gale, Baltimore insulation contractors. According to Castlemen, CSR was aware of the potential health hazards of its crocidolite asbestos dust in the 1940s and became aware in the early 1960s that one of its mill workers had developed mesothelioma. ³⁷² On November 2, 2006, the Circuit Court for Baltimore City held a hearing on CSR’s motion to dismiss and concluded in the following oral ruling that CSR lacked substantial meaningful contacts with Maryland and that subjecting CSR to the court’s jurisdiction would be constitutionally unfair: So the minimum contacts that are necessary to be shown, four invoices in this Court’s opinion, at least, do not indicate any meaningful contact with the State of Maryland such that one could say that this indicates that they would anticipate that the defendant could anticipate that he would be hailed into court in this State. I know that the plaintiff says that it is not just four invoices, that there were substantial shipments in this matter, but there are four. That’s really the number that I am looking at.

And it is over a rather substantial period of time. I don’t find that these are the substantial meaningful contacts. I have discussed or indicated, I guess while the plaintiff was arguing, that the advertising was done, I think, under the Camelback case is also not significant. The fact that the customers, mostly Johns-Manville, directed the defendant to send the goods to the Port of Baltimore to me is significant.

I think that when one is following the instructions of the customer to send the shipment where they are directed to send it that they have to follow the orders of the customer. They are certainly not thinking that that is an action that they could reasonably expect that they are going to be hailed into court based on that. And I have to say that, even if one could say that there were certain minimal contacts here, that when you get to step two, which is the constitutional reach, that I think that it falls short. It has been pointed out that we are dealing with a company that is located in another continent, many time zones away from where we are.

And the fairness of bringing them in, I think, is beyond the constitutional reach. ³⁷³ The court also concluded that CSR was not subject to Maryland’s jurisdiction under the long-arm statute. The court issued an order granting CSR’s motion to dismiss on January 8, 2007. DISCUSSION Standard Of Review Taylor contends that the court, in limiting its consideration to the four invoices, failed to evaluate the evidence in a light most favorable to Taylor. According to Taylor, the court erred in rejecting the affidavits of Lloyd and William Gardner, observations from co-workers, and also improperly ignored evidence of other contacts, such as CSR’s sugar trade and asbestos advertising in Asbestos magazine.

According to CSR, Taylor had to prove facts establishing jurisdiction to defeat the motion to dismiss, instead of merely adducing evidence to generate disputed facts, which would be sufficient to defeat a motion for summary judgment. CSR contends that Taylor failed to sustain her burden of proof, and the court correctly analyzed the controlling law and properly applied it to the facts of record. “The defense of lack of personal jurisdiction ordinarily is collateral to the merits and raises questions of law.” Bond v. Messerman, 391 Md. 706, 718 , 895 A.2d 990 (2006). “The burden of alleging and proving the existence of a factual basis for the exercise of personal jurisdiction, once the issue has been raised, is upon the plaintiffs.” McKown v. Criser’s Sales and Serv., 48 Md.App. 739, 747 , 430 A.2d 91 (1981). Plaintiffs must establish a prima facie case for personal jurisdiction to defeat a motion to dismiss. See Beyond Sys., Inc. v. Realtime Gaming Holding Co., 388 Md. 1, 26, 29 , 878 A.2d 567 (2005). “If facts are necessary in deciding the motion, the court may consider affidavits or other evidence adduced during an evidentiary hearing.” Id. at 12 , 878 A.2d 567 .

Without an evidentiary hearing, courts are to consider the evidence in the light most favorable to the non-moving party when ruling on a motion to dismiss for a lack of personal jurisdiction. See Zavian v. Foudy, 130 Md.App. 689, 702 , 747 ³⁷⁴ A.2d 764 (2000). See also Mylan Laboratories, Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.l993)(a plaintiff “need prove only a prima facie case of personal jurisdiction” when the court decides “a pretrial personal jurisdiction dismissal motion without an evidentiary hearing”); Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989)(citing 2A Moore’s Federal Practice, § 12.07 (1985 & Supp.l992-93))(“[t]he burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge” and the court “must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction” when deciding a motion to dismiss on jurisdictional grounds). The circuit court did not hold an evidentiary hearing in this case and was, therefore, required to apply these standards.

We agree with Taylor that the court did not properly consider the evidence in limiting its consideration to the four invoices. In reviewing Taylor’s jurisdictional claim, we consider, therefore, not only the four invoices, but also the evidence favorable to Taylor, adduced in affidavits by the Gardners, Captain Stewart, and Dr. Castleman, as well as other evidence, including evidence of CSR’s sugar shipments and asbestos advertising. The Dual Inquiry In Analyzing Personal Jurisdiction In determining whether a Maryland court may exert personal jurisdiction over a foreign defendant, we engage in a dual inquiry, considering if the exercise of jurisdiction 1) is authorized under Maryland’s long arm statute, Md.Code (2006 RepLVol., 2007 Supp.) § 6-103 of the Courts and Judicial Proceedings Article (JP), and 2) comports with the due process requirements of the Fourteenth Amendment. See Beyond Systems, 388 Md. at 14-15 , 878 A.2d 567 . “[T]he purview of the long arm statute is coextensive with the limits of personal jurisdiction set by the due process clause of the Federal Constitution.” Id. at 15 , 878 A.2d 567 .

Under JP § 6 — 103(b), where jurisdiction is based on a cause of action arising from acts enumerated under the statutory section, ³⁷⁵ [a] court may exercise personal jurisdiction over a person, who directly or by an agent: (1) Transacts any business or performs any character of work or service in the State; (2) Contracts to supply goods, food, services, or manufactured products in the State; (3) Causes tortious injury in the State by an act or omission in the State; (4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State.... In our due process inquiry, we must determine whether the defendant has “certain minimum contacts with [Maryland] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp, and Placement, 326 U.S. 310, 316 , 66 S.Ct. 154, 158 , 90 L.Ed. 95 (1945) (citation omitted). We first address in personal jurisdiction cases “the nature and extent of contacts that must be shown between the forum and the defendant to satisfy the threshold demands of fairness.” Camelback Ski Corp. v. Behning, 312 Md. 330, 336 , 539 A.2d 1107 , cert. denied, 488 U.S. 849 , 109 S.Ct. 130 , 102 L.Ed.2d 103 (1988). “[T]he 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.” Id. at 338, 539 A.2d 1107 . Cases may generally be divided into those involving general jurisdiction, in which the cause of action is unrelated to the contacts, and those involving specific jurisdiction, in which the cause of action arises out of the conduct which constitutes the contacts.

See id. In general jurisdiction cases, plaintiffs must show that the defendant’s contacts with the state are continuous and systematic to establish jurisdic ³⁷⁶ tion. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 , 104 S.Ct. 1868, 1873 , 80 L.Ed.2d 404 (1984). In specific jurisdiction cases, “it may be entirely fair to permit the exercise of jurisdiction to that claim” absent other continuous and systematic general business conduct.

Camelback, 312 Md. at 338-39 , 539 A.2d 1107 . There are cases, however, that do not fit neatly in either category, and for these cases “the proper approach is to identify the approximate position of the case on the continuum that exists between the two extremes, and apply the corresponding standard, recognizing that the quantum of required contacts increases as the nexus between the contacts and the cause of action decreases.” Id. at 339 , 539 A.2d 1107 . Due process requires that one show in each case “some act by which the defendant purposefully avails 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 , 78 S.Ct. 1228, 1239-40 , 2 L.Ed.2d 1283 (1958). In other words, the defendant’s conduct and connection with the forum State must be such “that he should reasonably anticipate being haled into court there.” See World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297 , 100 S.Ct. 559, 567 , 62 L.Ed.2d 490 (1980).

The Supreme Court in Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 112 , 107 S.Ct. 1026, 1032 , 94 L.Ed.2d 92 (1987), held that a California court had no jurisdiction over Asahi Metal Industry Co., Ltd. (“Asahi”), a Japanese company that manufactured tire valve assemblies in Japan and sold them to a manufacturer in Taiwan. The Taiwan manufacturer was sued in California by a person injured when he lost control of his Honda motorcycle in California. The plaintiff alleged that his cycle’s tire, tube and sealant were defective. The Taiwan manufacturer cross-claimed against Asahi, and that claim was the only one at issue remaining in the case, the others having been settled and dismissed.

Justice O’Connor, in a plurality opinion, wrote that the “placement of a product into the stream of commerce, without more, is not an act of the defendant ³⁷⁷ purposefully directed toward the forum State.” Id. at 112 , 107 S.Ct. at 1032 . According to Justice O’Connor’s opinion, one must show additional conduct indicating “an intent or purpose to serve the market in the forum State[,]” such as “designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State.” Id. Justice Brennan, however, in a concurring opinion joined by justices Marshall, Black-mun, and White, agreed with dismissal because the exercise of personal jurisdiction over Asahi in this case would not comport with “fair play and substantial justice” under International Shoe Co., 326 U.S. at 320 , 66 S.Ct. at 160 . See Asahi, 480 U.S. at 116 , 107 S.Ct. at 1034 .

The concurring justices did not agree with Justice O’Con-nor’s stream-of-commerce theory, nor with the conclusion that Asahi did not “purposely avail itself of the California market.” Justice Brennan and the three other justices opined that a plaintiff need not show “ ‘[additional conduct’ directed toward the forum before finding the exercise of jurisdiction over the defendant to be consistent with the Due Process Clause.” See id. at 117 , 107 S.Ct. at 1034 . According to Justice Brennan, Justice O’Connor’s opinion constituted a “marked retreat” from the analysis in World,-Wide Volkswagen. See id. at 118, 107 S.Ct. at 1035 . The four concurring justices considered placement of a product into the stream of commerce to be sufficient, because [t]he stream of commerce refers to not unpredictable currents or eddies, but to the regular and anticipated flow of products from manufacture to distribution to retail sale.

As long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of lawsuit there cannot come as a surprise. Id. at 117 , 107 S.Ct. at 1034-35 . Our Court of Appeals has adopted a three-part test, reflecting the Supreme Court’s jurisprudence, for evaluating whether specific jurisdiction exists: ³⁷⁸ [W]e consider (1) the extent to which the defendant has purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs’ claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable. Beyond Systems, 388 Md. at 26 , 878 A.2d 567 . [The] “purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated” contacts, or of the unilateral activity of another party or a third person[.] Jurisdiction is proper, however, where the contacts proximately result from actions by the defendant himself that create a substantial connection with the forum State.

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 , 105 S.Ct. 2174, 2183-84 , 85 L.Ed.2d 528 (1985) (citations omitted and emphasis in original). The second question we address in personal jurisdiction cases is whether an exercise of jurisdiction over a foreign defendant is fair overall, in light of the factors the Supreme Court has provided for making such an evaluation. See Camelback, 312 Md. at 341 , 539 A.2d 1107 . The Supreme Court in Rudzewicz explains as follows: Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with “fair play and substantial justice.” Thus courts in “appropriate case[s]” may evaluate “the burden on the defendant,” “the forum State’s interest in adjudicating the dispute,” “the plaintiffs interest in obtaining convenient and effective relief,” “the interstate judicial system’s interest in obtaining the most efficient resolution of controversies,” and the “shared interest of the several States in furthering fundamental substantive social policies.” 471 U.S. 462, 476-77 , 105 S.Ct. 2174, 2184 , 85 L.Ed.2d 528 (1985) (citation omitted).

The Supreme Court indicates that a ³⁷⁹ court’s assertion of jurisdiction over a foreign national places a unique burden “upon one who must defend [itself] in a foreign legal system” and this burden “should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.” See Asahi, 480 U.S. at 114-16 , 107 S.Ct. at 1033-34 (California court’s exercise of personal jurisdiction over a corporation headquartered in Japan held to be unreasonable and unfair when considering “the international context, the heavy burden on the alien defendant, and the slight interests of the plaintiff and the forum State”). Taylor’s Arguments In Favor of Jurisdiction Taylor argues that she satisfied a number of grounds for the imposition of personal jurisdiction over CSR under JP § 6-103(b). According to Taylor, she established jurisdiction under JP § 6-103(b)(l) because CSR transacted business in Maryland by utilizing the Port of Baltimore as the port of entry for its delivery of asbestos fiber to American customers. This transacted business, according to Taylor, was the direct and proximate cause of injuries sustained by Smith and Anzulis.

Taylor also argues that JP § 6-103(b)(l) is satisfied because CSR shipped massive amounts of Australian raw sugar to the Port of Baltimore. Taylor asserts additionally that she established jurisdiction under JP § 6-103(b)(2) by showing that CSR supplied goods to the state and under JP § 6-103(b)(3) by establishing that CSR caused tortious injury in Maryland in failing to satisfy its duty to warn longshoremen, specifically Smith and Anzulis, about the hazards of asbestos dust. Finally, Taylor argues that she satisfied JP § 6-103(b)(4) by showing that CSR solicited business in Maryland by advertising regularly in Asbestos, a national trade magazine that was circulated in Maryland. Taylor also