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A Korean motorcycle helmet maker did not have sufficient contacts with Michigan to be haled into court there, even though its helmets are available all over the country, the Michigan Court of Appeals ruled on Sept. 6. Vargas v. Hong Jin Crown Corp., No. 222374. The helmets were made in South Korea, then sent to distributors in California, Massachusetts and Wisconsin. The plaintiff in this case bought his helmet from a Michigan retailer who had purchased it from the Wisconsin distributor. Although the manufacturer intended the helmets to be sold throughout the United States, the court ruled that it did not have minimum contacts with Michigan — where the plaintiff suffered severe head injuries — because of its lack of direct contacts with the state. According to Charles McCarter, a Burton, Mich., solo practitioner who represented the plaintiff, the manufacturer “flooded the Michigan market” with its helmets, and “just about every motorcycle retailer” carried Hong Jin Crown helmets. Nevertheless, the court ruled that the manufacturer did not have enough market penetration in Michigan to foresee being sued there and granted it summary judgment. “There was market penetration,” McCarter said, “it just wasn’t reflected in the record. I was only the attorney on appeal, so I had to work with the record that was already there.” He added, “This panel ignores the realities of the modern marketplace. Under this decision, a manufacturer can use a Canadian wholesaler to flood the American marketplace and could not be sued in Michigan or any other state. This defies common sense. We showed exactly the sort of contacts that the U.S. Supreme Court would be interested in. The distribution agreement said the products would be distributed throughout the U.S. There was a Midwest distributor, and a Michigan retailer. The accident happened in Michigan, the law to apply was Michigan’s and Michigan was convenient for all the parties.” But, he admitted, he was merely surprised, not shocked, at the decision. While he considered the U.S. Supreme Court’s precedential 1987 decision in Asahi Metal v. Superior Court of California to be controlling, McCarter said the “stream of commerce theory” was not “fully developed at this point.” William McCandless of DeNardis, McCandless & Muller in Detroit represented the manufacturer. He said the opinion was “fully consistent with U.S. Supreme Court precedent,” given the “undisputed facts” of the case. “The underlying element of all the Supreme Court cases was fundamental fairness,” he said. “Here there was no regular, direct contact with Michigan.” The parties had agreed to a tentative settlement shortly before the appellate court decided the case, but had not finalized the terms of the agreement the day of the decision; however, they said they plan to go through with the settlement. Citing confidentiality concerns, McCarter declined to say how much his client would get. McCandless said that his client’s portion would cover only the plaintiff’s litigation costs, while the bulk of the money would be paid by the Wisconsin distributor, Castle Sales.

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