Arizona Court of Appeals Division Two Holds That Arizona Courts Have Personal Jurisdiction Over Manufacturer That Contracts With Distributors to Sell Its Products in Arizona.

Plaintiffs filed suit alleging damages resulting from a fatal crash of an aircraft built from a kit purchased from an Arizona retailer.  The manufacturer, which has no offices or employees in Arizona and does not directly sell its products to retail customers anywhere in the United States, moved to dismiss for lack of personal jurisdiction. 

The trial court granted the motion to dismiss for lack of personal jurisdiction.  Plaintiffs appealed.  The Court of Appeals reversed.

In evaluating a motion to dismiss for lack of personal jurisdiction, Arizona courts must determine whether the defendant has engaged in purposeful conduct directed toward Arizona for which it could reasonably expect to be subject to suit in Arizona.

Here, the manufacturer has three North American distributors that sell its products throughout the United States.  Between 2004 and 2006, the company’s distributors sold a combined total of 116 of its products in Arizona.  There was no evidence that the manufacturer restricted its distributors’ sale of products in Arizona.  To the contrary, one of the distributors was required by contract to use its “best efforts to actively promote sales” in Arizona. 

The manufacturer’s use of intermediaries to distribute its products in Arizona did not shield it from personal jurisdiction.  The company could not “close its eyes” and plead ignorance to its products being sold in Arizona.  The purposeful direction of sales of the manufacturer’s products in Arizona provided sufficient “minimum contacts” to satisfy due process.  Because the claim arose out of those contacts, the manufacturer is subject to personal jurisdiction in Arizona.

The Court of Appeals therefore reversed and remanded for further proceedings.

Presiding Judge Vásquez authored the opinion; Judges Kelly and Espinosa concurred