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Motion for Jurisdictional Discovery Granted: Foreign Parent and the Stream-of-Commerce Theory

In Eastman Chemical Co. v. Alphapet Inc., et al., C.A. No. 09-971-LPS-CJB (D. Del. Nov. 18, 2011), the plaintiff offered three arguments in support of its motion for jurisdictional discovery to determine whether the Court could exercise personal jurisdiction over a Thai parent company defendant. Judge Burke first rejected the notion that the Thai parent was bound by a forum selection provision contained in an agreement entered into by one of the parent’s subsidiary co-defendants, explaining that the plaintiff could advance no non-frivolous argument that the Thai parent was bound by that provision because (1) the parent was not a third party beneficiary of the agreement containing the provision, id. at 13-17, and (2) there was no suggestion that the parent received any direct monetary or non-monetary benefit from the agreement containing the provision such that it could be considered “closely related” to the agreement containing the forum-selection clause. Id. at 19-25. Judge Burke next rejected the plaintiff’s argument that discovery should be permitted to show that the Thai parent was subject to general jurisdiction, through an agency theory, based on its subsidiary’s continuous and systematic contacts with Delaware. Although the plaintiff alleged sufficient facts to suggest an agency relationship, the plaintiff “offer[ed] no evidence suggesting that the subsidiaries in question have any . . . significant Delaware contacts.” Id. at 28-30. Finally, the Court considered whether discovery should be permitted to determine whether the Thai parent could be subjected to personal jurisdiction in Delaware based on the stream-of-commerce theory. Judge Burke outlined Delaware’s “unique” stream-of-commerce body of law, explaining that jurisdiction may be found where there is a showing of “(1) an intent to serve the Delaware market; and (2) that this intent results in the introduction of the product [at issue] into the market and that plaintiff’s cause of action arises from injuries caused by that product.” Id. at 33 (quoting Belden Techs., Inc. v. LS Corp., 626 F. Supp. 2d 448, 456 (D. Del. 2009) (alteration in original)). Judge Burke emphasized that under the second prong, the relevant inquiry is not whether the defendants sold their products in Delaware, but rather “whether there are any Delaware sales of Defendants’ . . . products, or of other products that incorporate Defendants’ . . . products (even if those products themselves are not directly sold or marketed in Delaware).” Id. at 34 (emphasis added). Based on that standard, Judge Burke granted-in-part the plaintiff’s motion and permitted limited discovery into whether the Thai parent could be subjected to personal jurisdiction in Delaware based on the stream-of-commerce theory in connection with the “sales and distribution of . . . products in the U.S. and Delaware.” Id. at 38.


Eastman Chemical Co. v. Alphapet Inc., et al., C.A. No. 09-971-LPS-CJB (D. Del. Nov. 18, 2011)

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