PHILADELPHIA – A judge has transferred an injury lawsuit brought by a local ophthalmologist, who suffered a tear of his left triceps tendon and other injuries when his bicycle’s coaster brake allegedly failed and he crashed on a roadway, to a New Jersey federal court.
Mitchell S. Fineman, M.D. and Lucy Q. Fineman of Lafayette Hill first filed suit in the Philadelphia County Court of Common Pleas on June 9, 2023 versus Trek Bicycle Corporation, LTD. of Waterloo, Wis., Electra Bicycle Company, Inc. of Encinitas, Calif., Electra Bicycle Corporation, LLC of Vista, Calif., Trek Retail Corporation (doing business as “Trek Bicycle Philadelphia Manayunk”) of Philadelphia, Beacon Stores, Inc. (doing business as “Beacon Cycling” and/or “Beacon Cycling & Fitness” of Northfield, N.J., Mitchell Rovins and Susanna Rovins (doing business as “Beacon Stores, Inc.”, “Beacon Cycling” and/or “Beacon Cycling & Fitness”) of Linwood, N.J., SRAM, LLC of Chicago, Ill., Heng Ying Machinery Co., LTD, of Taoyuan City, Taiwan, John Doe(s), Jane Doe(s), ABC Corporation and DEF, LLC.
“The case concerns Dr. Fineman’s bicycle accident in New Jersey. The Finemans blame the accident on a Trek group bicycle that he purchased from the Beacon Stores group – specifically, they say the coaster brake failed in the bicycle’s SRAM gear hub, which in turn was manufactured by Heng Ying. The complaint identifies 16 counts of various New Jersey and Pennsylvania statutory and common law causes of action,” U.S. District Court for the Eastern District of Pennsylvania Judge John F. Murphy said.
“The Trek group removed the case to our Court. The Beacon Stores group consented to removal, and Heng Ying had not yet been served. Heng Ying moves to dismiss because the Finemans failed to properly serve it with the complaint, and even if they did, this court lacks personal jurisdiction over Heng Ying.”
Murphy began by outlining the matters of service and jurisdiction, with respect to Heng Ying.
“Starting with service, Heng Ying is a corporation organized and existing under the laws of Taiwan, with a principal place of business in Taoyuan City, Taiwan. Because the Trek group properly removed the case, service must be proper under federal law. And because Taiwan is not a member of the Hague Convention, service here must be effected under Federal Rule of Civil Procedure 4(f)(2). There appears to be no dispute that the Finemans failed to serve Heng Ying in accordance with Taiwanese law or as directed in response to a letter rogatory. That said, we have the latitude to allow for service to be perfected and entertain arguments for alternative service – which may be on good footing considering that Heng Ying has notice and is participating in the case. That may be why Heng Ying focuses on the argument that correcting service would be futile because we lack personal jurisdiction,” Murphy stated.
“Turning to jurisdiction, the complaint alleges that Heng Ying ‘regularly and systematically conducted business in the United States of America, including the County of Philadelphia.’ The complaint does not expand on that allegation, but it does allege that Dr. Fineman’s bicycle was manufactured in Taiwan and contains an SRAM hub made by Heng Ying. Heng Ying, for its part, offers a sworn declaration from its sales manager, Mr. Chang. Mr. Chang avers that Heng Ying has no direct connection to Pennsylvania. Rather, Heng Ying makes the hubs at issue for SRAM in Taiwan, ships the hubs to some other factory in Taiwan and receives payment in Taiwanese dollars from SRAM’s Taiwanese operation. This of course leaves open the allegation that Heng Ying’s products eventually flow through the stream of commerce into Pennsylvania.”
Murphy found there was “nothing in the record to suggest that Heng Ying did anything at all to target Pennsylvania” and rather, “Heng Ying demonstrated that it makes and conveys the hubs in Taiwan, and although the United States market may be an obvious destination, there’s no connection with Pennsylvania in particular” and “no indication that Heng Ying purposefully availed itself of Pennsylvania’s market.”
“Second, the Finemans argue that there must be personal jurisdiction over Heng Ying because the Consumer Product Safety Commission issued a recall notice on SRAM hubs, which in turn identified Heng Ying as the manufacturer. That certainly tends to show that Heng Ying’s hubs penetrated the U.S. market, but that’s not really in dispute, and it does nothing to show that Heng Ying purposefully availed itself of Pennsylvania,” Murphy said.
“Third, the Finemans argue that Mr. Chang’s declaration leaves unanswered questions, such as whether a representative from Heng Ying has ever been to Pennsylvania for any reason, or how well Heng Ying understood its products would enter the U.S. market. Fair enough, but, again, ‘what is necessary is a deliberate targeting of the forum,’ so efforts ‘to exploit a national market’ that ‘necessarily included Pennsylvania’ are insufficient.”
Murphy also did not find favor with the Finemans’ argument to turn to Federal Rule of Civil Procedure 4(k)(2), which allows the Court to exercise personal jurisdiction over Heng Ying if “(A) The defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and (B) Exercising jurisdiction is consistent with the United States Constitution and laws.”
“In reply, Heng Ying argues that there was no more targeting of the U.S. market generally than there was of Pennsylvania in particular. That strikes us as dubious. Mr. Chang’s declaration focused almost entirely on establish a lack of targeting of Pennsylvania – not the United States. Nor did Mr. Chang highlight any particular connection to some other state. Heng Ying was making hubs for SRAM – a company based in the United States – and Heng Ying was specifically called out in the United States recall for the hubs,” Murphy stated.
“As a general matter, ‘specific jurisdiction attaches in cases identical to the ones here – when a company…serves a market for a product in the forum…and the product malfunctions there.’ Given where the record stands, we cannot say that Heng Ying has done its part to call Rule 4(k)(2) jurisdiction into question. So coming back to where we began, we cannot agree with Heng Ying that it would be futile to address the problematic service here. Pursuant to 28 U.S.C. Section 1448, we will provide the Finemans with an opportunity to propose a plan for adequate service on Heng Ying. Accordingly, we deny Heng Ying’s motion to dismiss.”
Murphy also concurrently issued a separate denial of the Finemans’ motion to remand the case to the Philadelphia County Court of Common Pleas.
UPDATE
On March 14, defendants Beacon Stores, Inc. and the Rovins argued that jurisdictional discovery was in fact needed in this case, on that point agreeing with the plaintiffs – but added that if the instant court lacks jurisdiction, then the matter should be transferred to the U.S. District Court for the District of New Jersey, where the plaintiffs could then file an action in an appropriate New Jersey state court.
Murphy agreed, denying the previous dismissal motions as moot and authorizing the transfer of the case to a U.S. District Court for the District of New Jersey in Camden, on March 19.
“The Beacon Stores group moved to dismiss for lack of personal jurisdiction because the stores – which have since closed – and their former owners, the Rovinses, are entirely New Jersey-based and have no connection to Pennsylvania. The Finemans mounted little credible opposition on that point, but asked that rather than dismiss the Beacon Stores group, we transfer the case to the District of New Jersey. Even at a glance, the case for transfer is strong. Indeed, the premise of the Trek group’s motion to dismiss is that the case has no relevance to Pennsylvania other than the citizenship of the Finemans. So we ordered additional briefing on the prospect of transfer. Only the Beacon Stores group responded, and it did not oppose transfer. We conclude that transfer is warranted either under 28 U.S.C. Section 1404(a) – because the transfer factors are satisfied – or under Section 1406 – because transfer avoids dismissal of the Beacon Group stores pursuant to its compelling motion to dismiss for lack of personal jurisdiction,” Murphy ruled.
“Here, the record reflects that the only connection to Pennsylvania is that the Finemans are located here and they chose to file the case in Philadelphia court. Several factors compel transfer to New Jersey. First, the claim arose there – that is where Dr. Fineman purchased the bicycle and that is where the accident happened. Second, in its motion to dismiss, the Trek group compellingly argued that largely because of the accident location, New Jersey law would predominate in this case. Third, the Rovinses have retired and closed their bicycle stores, and given the other facts, it is at least remarkably inconvenient, if not downright inappropriate, for them to defend this case in Pennsylvania. The other factors are largely indifferent to transfer. And as mentioned, no party is opposed to transfer.”
For counts of negligence (inadequate recall), negligence (defective product), violating the New Jersey Product Liability Act, Pennsylvania strict liability (consumer expectation), Pennsylvania strict liability (risk-utility), Pennsylvania strict liability (failure to warn), breach of express warranty, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability, breach of warranty through violating the Magnuson-Moss Warranty Act, violating the New Jersey Consumer Fraud Act, violating the Pennsylvania Unfair Trade Practices and Consumer Protection Law, violating the federal Consumer Product Safety Act, negligence, misrepresentation and loss of consortium, the plaintiffs are seeking damages, jointly and severally, plus costs, attorney’s fees, punitive damages and treble damages.
The plaintiffs are represented by Marc H. Perry and Richard B. Wickersham Jr. of Post & Schell, in Philadelphia.
The defendants are represented by John C. Farrell and Elizabeth A. Underwood of Marshall Dennehey in Philadelphia, Brian G. Welsh of the Law Office of Dennis O. Wilson in Mount Laurel, N.J. and Charles Scott Toomey of Littleton Park Joyce Ughetta & Kelly, in Radnor.
U.S. District Court for the Eastern District of Pennsylvania case 2:23-cv-02272
Philadelphia County Court of Common Pleas case 230600934
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com