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State jurisdiction weighed in suit over exploding battery

Scott Lauck//March 4, 2020//

State jurisdiction weighed in suit over exploding battery

Scott Lauck//March 4, 2020//

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The Missouri Supreme Court is wrestling with whether a Korean battery manufacturer with no obvious connection to Missouri can nonetheless be sued in the state.

The court heard oral arguments on Feb. 25 in a lawsuit filed against LG Chem, which is based in South Korea. In a lawsuit pending in St. Louis County Circuit Court, Missouri resident Peter Bishop alleges that one of the company’s lithium-ion batteries exploded while in his pocket, severely burning him.

Bishop had purchased the battery from a small Missouri retailer, Smoke Smart, for use in his e-cigarette device. LG Chem maintains that its batteries aren’t intended to be used in such devices and that it doesn’t have any relationship with Smoke Smart or any other Missouri retailer. Instead, Smoke Smart allegedly obtained the batteries from a supplier in China, which in turn had acquired them from a China-based e-bike manufacturer.

Under those circumstances, can LG be brought into a Missouri court? Judge Nancy Watkins McLaughlin allowed the case to proceed in St. Louis County. But Rachel Hedley of Nelson Mullins in South Carolina, an attorney for LG Chem, argued that it was not enough for the company to have foreseen that some of its products might wind up in the state.

“Foreseeability is not a sufficient benchmark for personal jurisdiction under the due process clause,” she said.

John G. Simon of The Simon Law Firm in St. Louis, an attorney for Bishop, argued that Smoke Shop alone has sold more than 16,500 of that particular model of LG battery. The company must have known that its products were ending up in Missouri, Simon argued, and he said there was an “unsaid, unwritten agreement” that essentially made Smoke Shop an agent of LG.

“They’re acting to further the interests of their principal by selling batteries, which are making them money,” he said.

At issue is whether Missouri courts have specific jurisdiction to hear the case, particularly in the wake of a recent U.S. Supreme Court ruling. In 2017, the nation’s high court ruled in Bristol-Myers Squibb v. Superior Court of California that a state court couldn’t hear suits by nonresidents involving conduct that didn’t occur in that state.

Missouri’s high court appeared to be torn between the lack of apparent contacts between LG and Missouri on one hand, and the implications of finding there are none on the other. Judge Zel M. Fischer asked LG’s attorney if the company could be sued anywhere.

“Is it fair for me to read your argument that there wouldn’t be personal jurisdiction within any state in the United States of America?” he asked. Hedley responded that, in a case of this kind, Fischer was correct.

Judge Laura Denvir Stith asked if the argument would be different if there was evidence that a company had knowingly used intermediaries to shield it from liability.

“What’s to prevent any foreign manufacturer from setting up some cutouts as go-betweens … knowing they will sell the product in the United States, and they won’t be amenable to suit anywhere in the United States?” she asked. Hedley said there was no such evidence in this case.

But the court also pressed Simon on what he admitted was the “attenuated” link between LG and the Missouri market.

“You can’t just allege it once they contest it,” Stith said. “You have to have some facts on which to base it.”

Judges Patricia Breckenridge and Paul C. Wilson both pressed Simon on his rationale for saying Smoke Shop was an agent of a company with which it never did direct business. At times Simon indicated that LG had control over where its batteries were sold; other times, he said the company just didn’t care where suppliers sent the batteries so long as they were sold.

“The target’s moving here a little bit,” Wilson said. “Control and instruction sounds to me a little bit more like agency than knowledge or acquiescence.”

Simon urged the court to allow the suit to proceed. In briefs, he said there are at least 184 cases involving injuries allegedly caused by exploding LG batteries pending in courts across the country, including four others in Missouri.

“LG is taking the position that they are immune from lawsuits in the United States,” Simon said. “The only remedy left for Missouri citizens is to fly to Korea and litigate a case in a country that’s not theirs, in a language that’s not theirs, in a system that does not afford them the right to a jury trial.”

The case is State ex rel. LG Chem Ltd. v. Watkins McLaughlin, SC97991.

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