Torts — Jurisdiction — Non-residents — Action against Israeli company whose subsidiary manufactured, distributed, sold, or supplied contaminated drug which caused injury — Specific jurisdiction

40 Fla. L.
Weekly D2371cTop of Form

Torts
— Jurisdiction — Non-residents — Action against Israeli company whose
subsidiary manufactured, distributed, sold, or supplied contaminated drug which
caused injury — Specific jurisdiction — Where complaint alleged sufficient
facts to bring defendant’s actions within purview of section 48.193(1)(a) and
(f), Florida Statutes, affidavit of defendant’s corporate representative was
sufficient to refute the jurisdictional allegations of complaint, and evidence
submitted by plaintiffs refuted the allegations of corporate representative’s
affidavit so that there was a conflict in evidence, trial court was required to
hold limited evidentiary hearing to resolve disputed issues of fact — Because
neither defendant nor its subsidiary is incorporated in Florida or has its
principal place of business in Florida, Florida does not have general
jurisdiction over either company — Because there is contradictory evidence on
issue, court is required to conduct evidentiary hearing to determine whether
defendant had sufficient minimum contacts with Florida to satisfy due process
requirements

(CASANUEVA, Judge.) Teva Pharmaceutical Industries (hereafter “Teva
Industries”) appeals an order denying its motion to dismiss the Appellees’
complaint for lack of personal jurisdiction. In a sixth amended complaint, the
Appellees alleged claims against Teva Industries for negligence and strict
liability. Teva Industries argues that it is an Israeli company with no
connection to Florida or to this litigation and that, therefore, it is not
subject to personal jurisdiction in Florida. We reverse and remand for further
proceedings.

To establish long-arm jurisdiction over a party, “a trial court must
decide whether (1) there are sufficient jurisdictional facts to bring the
action within the purview of [section 48.193, Florida Statutes]; and (2) the
nonresident defendant involved has sufficient minimum contacts with Florida to
satisfy constitutional due process requirements.” Kin Yong Lung Indus. Co.
v. Temple, 816 So. 2d 663, 665-66 (Fla. 2d DCA 2002) (citing Venetian
Salami Co. v. Parthenais, 554 So. 2d 499, 501-02 (Fla. 1989)). The second
prong requires the trial court to “consider whether the defendant has
sufficient minimum contacts with the state so that the exercise of jurisdiction
would not offend traditional notions of fair play and substantial justice.” Res.
Healthcare of Am., Inc. v. McKinney, 940 So. 2d 1139, 1141 (Fla. 2d DCA
2006).

In ruling on a motion to dismiss for lack of jurisdiction, the complaint
must first be examined to determine whether it alleges a basis for jurisdiction
under section 48.193, Florida Statutes (2009). See Hilltopper Holding
Corp. v. Estate of Cutchin ex rel. Engle, 955 So. 2d 598, 601 (Fla. 2d DCA
2007). The plaintiff may either track the language of section 48.193 without
pleading supporting facts, or the plaintiff may allege “specific facts that
demonstrate that the defendant’s actions fit within one or more subsections of
section 48.193.” Id. Section 48.193(1) provides as follows:

Any person,
whether or not a citizen or resident of this state, who personally or
through an agent does any of the acts enumerated in this subsection thereby
submits himself or herself and, if he or she is a natural person, his or her
personal representative to the jurisdiction of the courts of this state for any
cause of action arising from the doing of any of the following acts:

(a) Operating,
conducting, engaging in, or carrying on a business or business venture in this
state or having an office or agency in this state.

. . . .

(f) Causing
injury to persons or property within this state arising out of an act or
omission by the defendant outside this state, if, at or about the time of the
injury, either:

1. The
defendant was engaged in solicitation or service activities within this state;
or

2. Products,
materials, or things processed, serviced, or manufactured by the defendant
anywhere were used or consumed within this state in the ordinary course of
commerce, trade, or use.

(Emphasis added.)

This conduct is required to establish “specific” jurisdiction.
Jurisdiction over a defendant may also be established under the theory of
“general jurisdiction” as provided in section 48.193(2), which states that
general jurisdiction may be established when “[a] defendant who is engaged in
substantial and not isolated activity within this state, whether such activity
is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction
of the courts of this state, whether or not the claim arises from that
activity.” Id. We conclude that this case must be reversed for an
evidentiary hearing for the trial court to consider whether the conduct of Teva
Industries meets the requirements for “specific jurisdiction” and whether Teva
Industries had sufficient minimum contacts with Florida to satisfy
constitutional due process requirements.

Specific
Jurisdiction

The sixth amended complaint alleged that during outpatient surgery, Luis
Ruiz was given the drug propofol which was contaminated with endotoxins,
microbial contaminants, or other bacteria. As a result, Mr. Ruiz suffered
serious and permanent injury. The complaint alleged that Teva Pharmaceuticals
USA, Inc. (hereafter “Teva USA”) is a wholly owned subsidiary of Teva
Industries; that Teva USA regularly conducts business in Hillsborough County,
Florida; and that Teva USA manufactured, distributed, sold, or supplied the
drug which caused the injury at issue. The complaint also alleged that Teva
Industries is a publicly traded, foreign corporation which is organized,
existing, and doing business under and by virtue of the laws of Israel. It
alleged that Teva Industries exercised 100% ownership and control over its
wholly owned subsidiaries, Teva USA; Sicor, Inc.; and Teva Parenteral
Medicines, Inc., and is therefore liable for any and all tort liabilities of
its subsidiaries. The complaint further alleged that Teva Industries regularly
conducts business in Hillsborough County, Florida, and that it manufactured,
distributed, sold, or supplied the drug at issue.

We conclude that the complaint alleged sufficient facts indicating that
Teva Industries’ actions fit within section 48.193(1)(a) and (f). Although Teva
Industries contends that the allegations are not sufficiently specific, we note
that the allegation that Teva Industries “regularly conducts business in
Hillsborough County, Florida” sufficiently tracks the language of section
48.193(1)(a).

Once the Appellees met this pleading requirement, the burden then shifted
to Teva Industries “to file a legally sufficient affidavit or other sworn proof
that contests the essential jurisdictional facts of [Ruiz’s] complaint.” Hilltopper
Holding Corp., 955 So. 2d at 601 (citing Venetian Salami Co., 554
So. 2d at 502; Kin Yong Lung Indus. Co., 816 So. 2d at 666). Teva
Industries submitted the affidavit of Kobi Altman, a vice president of finance,
to rebut the allegation that it was subject to Florida’s jurisdiction because
it conducts no business in Florida and has no connection to either Florida or
this litigation.

Mr. Altman testified in his affidavit that Teva Industries conducts no
business of any kind in Florida. Teva Industries is not incorporated in Florida
and it has never sought to file articles of incorporation in this state. It
maintains no branch offices in the state and does not own land or any other
property in the state. It has no Florida address, post office box, or telephone
number, and it maintains no Florida bank accounts. Its board members do not
meet, and have never met, in Florida. Teva Industries is not licensed to do
business in Florida, nor does it solicit any business in Florida or perform any
services in Florida. Teva Industries does not pay taxes in Florida, nor does it
hold a Florida manufacturer’s permit. Teva Industries has not designated a
Florida resident as an agent for service of process, nor has it engaged in any
advertising activity targeted at the Florida market.

Mr. Altman explained in his affidavit that Teva Industries and its
affiliates each observe separate corporate forms and that each company holds
its own board meetings and maintains its books and records separate from those
of the other two companies. Further, the companies have separate corporate headquarters.
Although one entity may from time to time pay the expenses owed by related
entities to third parties, those expenses are ultimately allocated to the
entity that incurred them.

When Teva Industries ships goods that it manufactures to Teva USA so that
the goods can be sold in the United States through other distributors, Teva USA
pays Teva Industries for those shipments. Title to the goods passes to Teva USA
outside the United States.

Mr. Altman testified that Teva Parenteral Medicines, Inc. (“Teva
Parenteral”), is a Delaware corporation with its principal place of business in
Irvine, California. Teva Parenteral manufactured propofol during the time
period relevant to the allegations in the complaint. Teva Industries does not
dominate or control the day-to-day operations of either Teva USA or Teva
Parenteral.

Mr. Altman testified that Teva Industries has never manufactured,
marketed, or sold propofol in the United States. Teva Industries did not have
any physical contact with, possession of, or legal title to the propofol
manufactured by Teva Parenteral. It had no role in testing the propofol sold in
the United States or in overseeing quality assurance programs with respect to
propofol. Further, Teva Industries had no involvement in the formulation of any
policies or procedures related to quality assurance activities with respect to
propofol and played no role in ensuring that the propofol manufactured by Teva
Parenteral was subjected to any prescribed process or procedure.

We conclude that Mr. Altman’s affidavit was sufficient to refute the
jurisdictional allegations in the complaint. In Hilltopper, 955 So. 2d
at 602, this court held that the affidavits of the corporate representative
were sufficient to refute the jurisdictional allegations in the complaint where
the affidavits alleged that

Id. at 600.

Here, Mr. Altman’s affidavit is far more comprehensive than the affidavit
in Hilltopper, and it was sufficient to refute the jurisdictional
allegations in the Appellees’ complaint. The affidavit, which must be taken as
true, indicates that Teva Industries’ conduct does not subject it to
jurisdiction in this state. See id. at 601.

Because Mr. Altman’s affidavit fully disputes the jurisdictional
allegations in the complaint, the burden shifts back to the Appellees to prove
by affidavit or other sworn proof that a basis for long-arm jurisdiction
exists. “If the plaintiff fails to come forward with sworn proof to refute the
allegations in the defendant’s affidavit and to prove jurisdiction, the
defendant’s motion to dismiss must be granted.” Id. at 602 (citing Venetian
Salami Co., 554 So. 2d at 502; Kin Yong Lung Indus. Co., 816 So. 2d
at 666; Capital One Fin. Corp. v. Miller, 709 So. 2d 639, 640 (Fla. 2d
DCA 1998); Lampe v. Hoyne, 652 So. 2d 424, 425 (Fla. 2d DCA 1995)).
However, if the plaintiff does come forward with such proof and there is a
conflict in the parties’ evidence, “the trial court should hold a limited
evidentiary hearing to resolve the disputed issues of fact and to determine the
jurisdiction issue.” McKinney, 940 So. 2d at 1140-41 (citing Venetian
Salami Co., 554 So. 2d at 503).

The Appellees submitted several documents in opposition to the motion to
dismiss. The first document is a diagram of Teva Parenteral’s manufacturing
facility in Irvine, California. At the top left corner of the document, it
states, “This document and its contents are the property of Teva Pharmaceutical
Industries LTD. The information contained herein may not be used or copied in
any manner without the written permission of Teva Pharmaceutical Industries
LTD.” At the bottom of the document on the right, the address is listed along
with the name “Teva Parenteral Medicines.” The Appellees noted that Teva
Industries has 100% ownership of Teva USA and that Teva USA is the sole
shareholder of the 1000 shares of stock of Teva Parenteral Medicines.

The Appellees also submitted documents from the Securities and Exchange
Commission noting that Teva Industries may own four properties in Miami,
Florida. They further submitted excerpts from the deposition of Brian Shanahan,
which suggested that Mr. Shanahan may have been the attorney for Teva USA, Teva
Industries, and Sicor. Mr. Shanahan also testified that from 2009 through 2012,
he was the assistant secretary of three companies: Teva USA, Teva Parenteral,
and Sicor.

Another deposition submitted by the Appellees was the deposition of Fran
Sakers Zipp. Beginning on July 1, 2009, as the head of global quality, she
handled global quality issues for all of Teva Industries both in the United
States and other countries: “any location where Teva was doing business
relative to quality activities.” However, she claimed that she did not know for
which entity she was exercising global or strategic oversight in July of 2009:

I don’t know
specifically. I was an employee of Teva USA. I was in a global role looking at
strategic activities across all Teva facilities related to quality matters, so
I cannot say specifically other than my role was as a global function for Teva
and employed by Teva USA.

Although Ms. Zipp claimed that she was not employed by Teva Industries,
the Appellees submitted evidence that contradicted these claims.

Ms. Zipp participated in the recall of propofol and discussed the
situation involving propofol with several other individuals who were a part of
her global quality team, including one employee who was based in Florida. Ms.
Zipp also discussed propofol with other members of Teva Industries, including the
CEO of Teva Industries, at a Teva Industries office in Israel. She further
testified that she reported the issues involving propofol to her “management”
at Teva Industries.

We conclude that the evidence submitted by the Appellees refuted the
allegations in Mr. Altman’s affidavit and that because there was a conflict in
the evidence, the trial court was required to hold a limited evidentiary
hearing to resolve the disputed issues of fact. In this case, there is no
dispute that Teva Industries owned 100% of the stock of both Teva USA and Teva
Parenteral and that the corporations have separate headquarters. Further, Mr.
Altman explained in his affidavit that Teva Industries and its affiliates each
observe separate corporate forms and that each company holds its own board
meetings and maintains its books and records separate from those of the other
two companies. Although one entity may from time to time pay the expenses owed
by related entities to third parties, those expenses are ultimately allocated
to the entity that incurred them.

On the other hand, Mr. Altman testified that Teva Industries does not
dominate or control the day-to-day operations of either Teva USA or Teva
Parenteral, that it had no role in overseeing quality assurance programs with
respect to propofol, that it had no involvement in the formulation of any
policies or procedures related to quality assurance activities with respect to
propofol, and that it played no role in ensuring that the propofol manufactured
by Teva Parenteral was subjected to any prescribed process or procedure. Mr.
Ruiz presented evidence that contradicted these assertions.

There was evidence that Ms. Zipp was the executive vice president and
global head of quality for Teva Industries. She testified that she handled
global quality issues for all of Teva Industries both in the United States and
other countries: “I was in a global role looking at strategic activities across
all Teva facilities related to quality matters . . . .” This would suggest that
Teva Industries had a hand in the day-to-day operation and policy decisions of
its subsidiaries.

Ms. Zipp testified that in 2009, she discussed propofol with members of
Teva Industries, including Eran Katz and Schlomo Yanai, who at the time was the
CEO of Teva Industries. The meeting was held at a Teva Industries office in
Israel. Later in the deposition, Ms. Zipp discussed an email she forwarded to
Mr. Katz, testifying that she “reported to Mr. Katz, so I was alerting my
management of this email.” Ms. Zipp was required to review and edit the field
alert form sent to the FDA, and such form was mailed only after she had
approved it. Her email to Mr. Katz notes that she made changes to the propofol
field alert that went to the FDA.

There was also evidence that, as an employee of Teva Industries, Ms. Zipp
was involved in corrective and preventative actions related to propofol, the
October 2009 recall of propofol, quality improvement, and enhanced facility
compliance with regulations. Therefore, there was evidence to support the finding
that Teva Industries did exercise authority over general policy and daily
operations, including the propofol recall, quality improvement, and enhanced
facility compliance.

Because the Appellees submitted depositions and documents that were
contrary to the allegations in Mr. Altman’s affidavit, the trial court was
required to hold a limited evidentiary hearing. See Venetian Salami
Co., 554 So. 2d at 503. “[A]n evidentiary hearing under Venetian Salami
resolves the factual disputes necessary to determine jurisdiction pursuant to
section 48.193 as well as whether minimum contacts exist to satisfy due process
concerns.” Dev. Corp. of Palm Beach v. WBC Constr., L.L.C., 925 So. 2d
1156, 1160 (Fla. 4th DCA 2006). Although the trial court conducted a hearing on
the motion to dismiss, it did not receive any testimony or evidence at the
hearing. The order denying the motion to dismiss contains no reasoning and does
not explain how the trial court resolved the disputed issues of fact.

General
Jurisdiction

As previously noted, jurisdiction over a defendant may also be established
under the theory of “general jurisdiction” as provided in section 48.193(2).
However, we conclude that the Appellees cannot establish the requirements for
general jurisdiction as recently delineated by the Supreme Court in Daimler
AG v. Bauman, 134 S. Ct. 746 (2014). In Daimler, the Court held that
the test to determine if general jurisdiction exists is whether the foreign
corporation’s “ ‘affiliations with the State are so “continuous and systematic”
as to render [it] essentially at home in the forum State.’ ” Id. at 761
(alteration in original) (quoting Goodyear Dunlop Tires Operations, S.A. v.
Brown, 131 S. Ct. 2846, 2851 (2011)). Noting that neither Daimler nor MBUSA
was incorporated in California or had its principal place of business there,
the Court held that the companies were not “at home in California, and hence
subject to suit there on claims by foreign plaintiffs having nothing to do with
anything that occurred or had its principal impact in California.” Id.
at 761-62.

In the present case, neither Teva USA nor Teva Industries is incorporated
in Florida or has its principal place of business here. Therefore, pursuant to Daimler,
Florida does not have general jurisdiction over either company.

Due Process

Even if the Appellees can establish that the conduct of Teva Industries
meets the requirements for specific jurisdiction, they must also establish that
Teva Industries has sufficient minimum contacts with Florida to satisfy
constitutional due process requirements. “The Due Process Clause of the
Fourteenth Amendment constrains a State’s authority to bind a nonresident
defendant to a judgment of its courts.” Walden v. Fiore, 134 S. Ct.
1115, 1121 (2014) (citing World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 291 (1980)). A defendant’s suit-related actions must create a
substantial connection with the state before that state can exercise
jurisdiction consistent with due process. Id. “First, the relationship
must arise out of contacts that the ‘defendant himself‘ creates with the
forum State.” Id. at 1122 (quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 475 (1985)). Second, the “minimum contacts” analysis examines the
defendant’s contacts with the state itself, not merely the defendant’s contacts
with persons who reside in that state. Id. Again, there was
contradictory evidence on this issue. On remand, the trial court should conduct
an evidentiary hearing to determine whether Teva Industries had sufficient
minimum contacts with Florida to satisfy the due process requirements.

Reversed and remanded for proceedings consistent with this opinion.
(MORRIS and SLEET, JJ., Concur.)