Products Liability Law Daily Italian bottle maker subject to jurisdiction in Idaho under ‘stream of commerce’ test
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Friday, April 16, 2021

Italian bottle maker subject to jurisdiction in Idaho under ‘stream of commerce’ test

By Leah S. Poniatowski, J.D.

The manufacturer’s placing the allegedly defective bottle into an extensive distribution network satisfied World-Wide Volkswagen’s definition of placing a product into the stream of commerce.

In a product liability case, a professional chef, who was injured when a wine bottle broke upon her opening it, was able to establish personal jurisdiction over the Italian manufacturer of the wine bottle under the "stream of commerce" test, the Supreme Court of the State of Idaho ruled, explicitly adopting the test and reversing the lower court, which the state high court found had incorrectly applied the "stream of commerce plus" test. Additionally, the supreme court affirmed the dismissal sought by the winery and the wine exporter, clarifying that under either test to establish defective manufacture, the chef’s expert’s opinion was too speculative as to the processes used by the winery and the exporter, and the opinion supported reasonable secondary causes of the defect instead of eliminating them (Griffin v. Ste. Michelle Wine Estates Ltd., April 14, 2021, Moeller, G.).

The chef purchased a bottle of 2011 Villa Antinori Chianti Classico D.O.C.G. Riserva from a grocery store in 2017 as a component of a sauce for a client. When she opened the bottle the following day with a corkscrew, the bottle fractured and severely injured the chef’s left hand. She filed a products liability-based multi-count lawsuit against all the parties involved in the manufacture and distribution of the wine bottle. The parties included Zignago Vetro S.P.A., the bottle manufacturer and a foreign limited liability company in Italy that engages in international trade; Marquesi Antinori SRL, an Italian wine company that produced the chianti; Chateau Ste. Michelle Wine Estates Ltd., an American importer that exported the wine to distributors in Idaho; and S&C Importers and Distributors, Inc., an Idaho distributor that sold the wine to Albertson’s LLC, the retailer that sold the wine in Idaho.

Antinori and Zignago have worked together for about a decade, with Antinori purchasing over 92 million bottles of wine from the manufacturer. As part of their supply agreement, the scope of the relationship and the products are discussed in detail. Zignago also acknowledged that it had discussed with Antinori the markets in which the wine makers operate. Zignago’s website is accessible in Idaho and features the specifications of the bottle identical to the one involved in the incident, however the products cannot be purchased from or directly sold from the website.

Personal jurisdiction. The chef alleged that a defect in the bottle caused her injury, and that personal jurisdiction over Zignago and Antinori in Idaho was valid because the companies placed the bottle within the stream of commerce in the state and knew or should have known that the bottle would be purchased by someone in Idaho. Zignago made a special appearance to challenge personal jurisdiction. The company’s chief financial officer submitted an affidavit with the company’s motion to dismiss stating, “I am submitting myself to the jurisdiction of the State of Idaho as it relates to this declaration," which the chef construed as allowing her to depose him.

The federal district court in Idaho denied the request to depose the CFO in Idaho before personal jurisdiction had been resolved on the issue and clarified that the CFO’s statement was limited to the special appearance, which was a common and reasonable action as it is a foreign company. Thereafter, the court granted the chef’s motion to stay Zignago’s hearing on the dismissal pending discovery, and that under the "stream of commerce plus" test, personal jurisdiction over the bottle maker was established. Following discovery, the court concluded that it did not have personal jurisdiction over the company and granted the company’s motion to dismiss.

Products liability. Discovery among the chef, Ste. Michelle, and Antinori continued. Over a year later, the winery and exporter filed for summary judgment, asserting that the chef could not meet the requirements to establish causation. She opposed the motion, contending that she only needed to demonstrate that she was injured, the product was defective, and that the defect existed when it left the control of the manufacturer. Alternatively, she argued that she could meet the requirements through circumstantial evidence of a defect. Her expert opined that the defect was caused by cone-shaped damage to the glass from contact impact, which could have occurred during bottling, shipping, or when being restocked at the retailer. He noted that S&C’s practices created a hazardous condition and Albertson’s restocking methods were "abusive," but he did not note any evidence that Antinori’s bottling machinery were poorly maintained or otherwise inadequate.

The parties then presented arguments on the summary judgment motions. However, over a month after arguments, the chef filed a motion to compel discovery concerning Antinori and Ste. Michelle. Almost two months later, the court issued its decision—finding that the chef’s expert’s opinion was not sufficient to establish that the defect existed at the time the product left the control of the manufacturer and granting the motions in favor of the winery and the exporter. The chef filed the present appeal.

"Stream of commerce". The Idaho Supreme Court conducted a thorough analysis of the U.S. Supreme Court’s history of personal jurisdiction and the evolution of the "stream of commerce" test, which allows personal jurisdiction to be exercised when a defendant places a product within the stream of commerce with an awareness that the product would be sold in the forum state and which was employed in the High Court’s ruling in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), to resolve the issue of minimum contacts and purposeful availment under the Due Process Clause. Two Supreme Court cases thereafter, Asahi Metal Indus. Co., Ltd. v. Superior Court of California, Solano Cnty., 480 U.S. 102 (1987), and J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011), promoted the "stream of commerce plus" alteration of the original doctrine. However, there was no court majority assenting to the application of this amended test.

In the case at bar, the state supreme court noted that the lower court had correctly acknowledged that Idaho employs the "narrowest grounds" analysis for interpreting U.S. Supreme Court decisions when no single rationale explaining the result is supported by five Justices. However, the lower court incorrectly applied the doctrine. In the absence of an Idaho ruling on the matter, the lower court had relied on Colorado’s high court, which employs a similar "narrowest grounds" analysis, but did not apply the World-Wide Volkswagen test as the Colorado decision held. Instead, the lower court predicted that the stricter personal jurisdiction standard would become the established test and based its decision on the "stream of commerce plus" test, pursuant to Asahi and J. McIntyre. This was incorrect, the Idaho high court stated, because "the proper determination for a trial court is not to predict where it believes the law is headed in the future, but to follow the law as it exists today." Thus, reversing the lower court, the Idaho Supreme Court held that the World-Wide Volkswagen test-the stream of commerce test-is the proper test in Idaho.

Despite the incorrect test, the lower court’s findings satisfied the "stream of commerce" test. The state high court explained that there was no doubt that Zignago put 43 million bottles into the stream of commerce; Ste. Michelle, since 2013, exported over 1000 bottles of the wine purchased by the chef to Idaho; and the retailer sold almost 300 bottles. Thus, the vastness of this distribution network for the bottles took it out of the realm of isolated or single contacts, satisfying the World-Wide Volkswagen definition of placing a product into the stream of commerce. Additionally, the company had knowledge that its bottles were sold and distributed in the United States, both from its relationship with the wine maker and its volume of sales. With respect to the "fairness" factors, under the World-Wide Volkswagen test, substantial justice and fair play are not offended by haling the bottle manufacturer into an Idaho court. The burden on the manufacturer was small compared to the state’s interest in protecting its citizens and the chef’s interest in seeking redress in the Idaho courts. Therefore, the lower court’s dismissal for lack of personal jurisdiction over the bottle manufacturers was reversed.

Speculative opinion. The chef argued that the lower court erred by only applying the "specific-defect" test on her product liability claim and not also the "malfunction" test. The high court ruled that under either test, she failed to establish that the defect existed in the bottle when it left Antinori’s control. With respect to the test applied, the state high court agreed that the lower court did not explicitly analyze the chefe’s claim under the "malfunction" test. However, the lower court applied the test, according to the supreme court, when it referred to the circumstantial evidence in the record and quoted the precedent establishing the test. Regardless, the chef’s expert’s opinion only speculated as to the bottling process at the winery, which was insufficient under either test. The high court noted that the expert’s opinion stated that the defect could have occurred during shipment or stocking, and both possibilities were reasonable secondary causes that would remove liability from the winery and the exporter. As such, the chef’s claim failed the "malfunction" test because the distribution system was not "enclosed." Moreover, the state high court was not persuaded that the lower court abused its discretion when it denied her motion for discovery, noting that she filed extremely late. Accordingly, the lower court’s dismissal of the chef’s case against Antinori and Ste. Michelle was affirmed.

The case is No. 47703.

Attorneys: Donald Farley (Powers Farley, PC) for Mary Clare Griffin. Anthony Todaro (DLA Piper LLP) for Ste. Michelle Wine Estates Ltd. and Marchesi Antinori S.R.L. Brendan T. Fitzpatrick (Quane Jones McColl, PLLC) for Zignano Vetro S.P.A.

Companies: Ste. Michelle Wine Estates Ltd.; Marchesi Antinori S.R.L.; Zignano Vetro S.P.A.; Albertson’S LLC; S & C Importers and Distributors, Inc. d/b/a S&C Wines

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