Sixth Circuit illuminates Michigan’s personal jurisdiction statute to cover exploding battery

A recent court decision in Michigan highlights the importance of jurisdictional considerations when it comes to litigation and what businesses need to consider to ensure their rights are protected and cases are tried in the appropriate venue.

In Sullivan v. LG Chem, LTD., No. 22-1203 (6^th Cir. 2023), the plaintiff was injured when a lithium-ion battery used for his e-cigarette device exploded in his pocket. Plaintiff alleged that he obtained the batteries from a vape store in Michigan. The defendant, LG Chem, a South Korean company, manufactured the battery. Plaintiff sued LG Chem for damages in the Circuit Court of Genesee County. LG Chem removed to the United States District Court for the Eastern District of Michigan and vigorously opposed personal jurisdiction. It argued that exercising personal jurisdiction over it in Michigan would be improper under both Michigan’s long-arm jurisdictional statute and the Due Process Clause because, as LG Chem contended, it never sold the batteries to the particular Michigan vape store; and never sold its batteries for individual consumer use in Michigan. In other words, LG Chem did not believe that Michigan had the right to exercise personal jurisdiction over it, as an out-of-state defendant, because it did not have a sufficient connection with the state.  

The district court granted LG Chem’s motion to dismiss, holding that, while its exercise of personal jurisdiction over LG Chem comported with due process, plaintiff had not sufficiently addressed whether the exercise of jurisdiction satisfied Michigan’s long-arm statute.

On appeal to the United States Court of Appeals for the Sixth Circuit, the Sullivan Court reviewed the limited discovery conducted in the district court and noted that LG Chem had sent at least two shipments of the batteries directly into the state of Michigan. In addition, LG Chem executed two supplier agreements with Michigan companies relating to the batteries.

Still, LG Chem disputed the existence of specific jurisdiction under MCL § 600.715. The Sullivan Court determined the Michigan Supreme Court’s decision in Green v. Wilson, 565 N.W. 2d 813 (Mich. 1997) required it to conduct two separate inquiries when determining whether a court sitting in Michigan has personal jurisdiction over a defendant: (1) under the state’s long-arm statute; and (2) under the Due Process Clause.

Michigan’s long-arm statute regarding specific jurisdiction, MCL § 600.715, reads in pertinent part:

The existence of any of the following relationships between a corporation or its agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgment against such corporation arising out of the act or acts which create any of the following relationships:

1. The Transaction of any business within the state.
2. The doing or causing any act to be done, or consequences to occur, in the state resulting in action for tort.

Considering the scope of Michigan’s long-arm statute under MCL § 600.715, the Sullivan Court held that LG Chem’s two shipments of its batteries and its two supplier contracts were sufficient evidence of transactions of business within Michigan, satisfying the statute’s first criterion.

With respect to the Due Process Clause inquiry, the Sullivan Court held that LG Chem purposefully availed itself of the benefits of doing business in Michigan and the protections of Michigan law. Ultimately, the court concluded the exercise of personal jurisdiction was reasonable and that the district court may properly exercise personal jurisdiction over LG Chem.

McDonald Hopkins’ attorneys have significant experience evaluating initial jurisdictional considerations in state and federal court in order to ensure our client’s rights are protected and the case is in the appropriate venue. If you have questions about whether or not your business activities expose your company to jurisdiction in Michigan or elsewhere, contact a member of the McDonald Hopkins’ litigation or supply chain teams.