Burch and Cracchiolo attorneys prevail in establishing Arizona Courts’ jurisdiction over Chinese manufacturer

Published on in Firm Highlights

Burch and Cracchiolo attorneys Greg Rosenthal and Bucky Slomski recently prevailed on a motion to establish that Arizona courts could maintain jurisdiction over a Chinese manufacturer whose product was the alleged cause of a serious fire in Phoenix.  B&C’s client is a manufacturer of attic ventilation fans which purchased all of the fan motors from a Chinese company.  Many of the fan motors are alleged to be defective and to have caused fires around the US, including Arizona. As the name brand of the fan, B&C’s client was sued for product liability arising from one such fire.  B&C filed a third-party complaint for indemnification and served the motor manufacturer in China, but the manufacturer filed a motion to dismiss to contest jurisdiction in Arizona, arguing that it provided its motors to a Chinese distributor and that it did not have sufficient contacts with Arizona to be brought into an Arizona court and that asserting jurisdiction in Arizona would be unconstitutional.

In opposing the motion to dismiss, Greg and Bucky developed substantial evidence including sales data, marketing materials and distribution agreements with major retailers, showing that the Chinese company did substantial business throughout the US. The B&C team even purchased one of the manufacturer’s products from a local Walmart.  In response, the manufacturer argued that its business in Arizona was not related to attic fans or motors of the type at issue in the current case, so jurisdiction would still be inappropriate.  But, in ruling in favor of B&C’s client, the court adopted and cited to Greg and Bucky’s arguments and evidence, noting that 100% of the company’s fan motors were designed for the United States market and that the evidence showed that it had purposefully directed millions of fan motors into the United States. Greg and Bucky proved that the manufacturer did not design a rare product which made its way into the Arizona market in an unforeseen way.  Rather, the company was given fair warning that its business activities could subject it to Arizona’s jurisdiction, and it purposefully availed itself of the privilege of conducting business in Arizona, meaning that jurisdiction was constitutional.  Because of the large number of these motors sent into US markets it is believed that this ruling could have nationwide implications.