Association for Challenge Course Technology (ACCT), a DE corporation is being sued in Oregon for “promulgating deficient safety standards.” Issue is where the trial should be held, in Oregon where the plaintiff lives and was injured or in DE or IL where ACCT is located and does businessPosted: August 22, 2016
This case is still ongoing so who knows where it will go and how it will end. However, the relevant Jurisdiction and Venue issues are pretty clear. If you sell yourself or services online and deliver product or services in a state, expecting your name to be used with the services, you are probably doing enough business to be sued in that state.
Plaintiff: Cassidy Almquist
Defendant: Synergo, LLC, an Oregon limited liability company, Synergo, an Oregon corporation; Association for Challenge Course Technology, a Delaware non-profit corporation
Plaintiff Claims: (1) in promulgating standards for its certified inspectors, that allow them to certify challenge courses as safe when the inspector knows that untrained challenge course workers will operate the course, and (2) by failing to include in the inspection standards a provision directing an inspector to recommend that a course be closed until workers receive proper training
Defendant Defenses: Jurisdiction and Venue
Holding: for the Plaintiff
This is not a final decision. The basis of this analysis may change or be changed at a later time by the trial court or an appellate court. This analysis is based on the facts and appellate opinion of this intermediate motion. However, the analysis and issues are relevant and important no matter the outcome.
Remember, any case where the plaintiff is rendered a paraplegic or quadriplegic by the accident is probably going to involve litigation because of the medical bills and future medical care. On top of that, worker’s compensation insurance companies are directed both by subrogation clauses and state law sometimes to recoup money paid out for injuries. The plaintiff in this case was working at the time of her injury so the likelihood of a lawsuit was probably absolute.
The decision is based on a motion to dismiss filed by the defendant Association for Challenge Course Technology (ACCT). The motion is based on the ACCT being sued in a state where they have no business presence so it is requesting a dismissal because it is the wrong jurisdiction and venue to sue ACCT under the law.
The plaintiff was working at the Bar-M-Ranch in Oregon as a camp counselor. Who she was working for was not really identified, and the Bar-M-Ranch is not identified as a defendant. Guessing, that means she was working for the Bar-M-Ranch, and they were not sued because they had worker’s compensation insurance, which protects them; actually prohibits an injured employee from suing the employer.
The plaintiff was injured when she fell from a “giant swing” and was paralyzed.
The Calvary Church Tri-Cities constructed the adventure course at the Bar-M-Ranch in Richmond Oregon. The camp director asked the plaintiff to demonstrate the Giant Swing. A camp employee, who was not trained to operate the Giant Swing, improperly connected the plaintiff to the swing. She fell 50’ to the ground.
Synergo, a defendant was an ACCT member and professional vendor member, PVM.
Synergo is in the business of, among other things, inspecting challenge courses. Synergo is located in Tigard, Oregon, and is a dues-paying member of ACCT. Synergo is the only accredited Professional Vendor Member (“PVM”) of ACCT in Oregon. Synergo’s founder and manager, Erik Marter, served on the Board of Directors of ACCT, and is the only certified ACCT professional inspector in Oregon. http://www.teamsynergo.com/our-story/ ; and http://www.acctinfo.org/?PVMList%20 (lasted visited May 20, 2016). Synergo conducts inspections of challenge courses according to ACCT standards. (Am. Compl. ¶ 28.)
Synergo was hired by Calvary Church Tri-Cities to inspect the challenge course, described by the court as an adventure course. Approximately a month before the accident defendant Synergo had sent an employee to inspect the course and giant swing. During the inspection, Synergo had discovered the Church, and the Bar-M-Ranch employees had not been trained in how to operate the giant swing. Synergo did not act on this information.
Synergo did not direct or recommend that Calvary close the Giant Swing until the operators of the swing were trained. If recommended by Synergo, Calvary would have closed the Giant Swing.
The lawsuit was filed against Synergo and ACCT. ACCT filed a motion to dismiss based on improper jurisdiction. The District Court’s denial of that motion is analyzed below.
Analysis: making sense of the law based on these facts.
In a jurisdiction fight, the plaintiff has to prove the court where the plaintiff chose to file the case has the legal right to hear the case. The term personal jurisdiction is used because the courts look at the defendants, even though a corporation, as an individual in who they deal with the state where the case is filed.
Jurisdiction is also a constitutional issue and controlled by US Supreme Court decisions and the States Long Arm Statute. Meaning the state passes a law, the long-arm statute that defines what is necessary to be bringing an out of state defendant into a local court within the state. The federal law is then applied to see if the state long arm statute violates federal law and as in this case.
The entire discussion is based on the constitutional right to due process. “Due process requires that defendants ‘have certain minimum contacts’ with the forum state ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'”
Oregon Federal Courts are part of the 9th circuit. The ninth circuit employs a three-prong test to determine if the defendant has had the minimum contacts to be subject to the jurisdiction of the court at issue.
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.
Plaintiff bears the burden of satisfying the first two prongs. The burden then shifts to the moving defendant to present “a ‘compelling case’ that the exercise of jurisdiction would not be reasonable.”
For tort claims the court applies a purposeful direction test when looking at the evidence.
For claims sounding in tort, courts in this circuit “instead apply a ‘purposeful direction’ test and look to evidence that the defendant has directed his actions at the forum state, even if those actions took place elsewhere
To prove the purposeful direction test the plaintiff must show the defendant purposefully directed his conduct toward residents in the state at issue. In the past that has meant the defendant placed his products in the stream of commerce with the expectation they would be purchased in the state at issue. That was easier to determine when catalogs were sent out from a warehouse, and products were mailed from the business warehouse to the state.
Now with services that are delivered over the Internet or based on webpages the test is complicated.
ACCT argued it did not direct its activities to Oregon.
By Declaration, Todd Domeck, Vice Chairman of the Board of Directors with ACCT, informed the Court that ACCT is a Delaware non-profit corporation with its principal place of business in Illinois. ACCT has no office or registered agent in Oregon, and no employees who reside in Oregon. Domeck also states that “ACCT was not consulted during the construction of the ‘Giant Swing,'” nor did ACCT provide training for “any employees of the Bar-M-Ranch who were to be operators of the ‘Giant Swing.'”
Based on the ACCT affidavit, the test then looks at other actions of the ACCT.
In light of those facts, the jurisdictional analysis here turns on the extent to which ACCT, as a non-profit trade association, acted by way of its website and its certification of Synergo to create a presence in Oregon. In aid of the Court’s analysis of ACCT’s purposeful direction in Oregon, the Court relies on the uncontroverted allegations of the Amended Complaint, the Micah Henderson Declaration, and the Internet websites of ACCT and Synergo.
The court then examined the ACCT website. The analysis is based on a sliding scale” “…likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the Internet.”
…that a state may assert jurisdiction over a nonresident defendant “when that person (1) directs electronic activity into the State, (2) with the manifested intent of engaging in business or other interactions within the State, and (3) that activity creates, in a person within the State, a potential cause of action cognizable to the State’s courts”.
ACCT described itself, as any company would. However, that description the court found stated that ACCT intended to sell its services in Oregon.
On its website, ACCT describes itself as “the world’s leading and largest American National Standards Institute (ANSI) Accredited Standards Developer focused specifically and solely on the challenge course industry.” http://www.acctinfo.org (last visited May 20, 2016). Through its website, ACCT represents that it “develops, refines, and publishes standards for installing, maintaining, and managing challenge courses; provides forums for education and professional development; and advocates for the challenge course and adventure industry.” ACCT’s website is an interactive commercial website, and ACCT uses it to advertise and sell its services and merchandise. Specifically, individuals and businesses may purchase memberships and ACCT’s standards book, apply and register for inspector certification courses and exams, and access challenge course related employment listings.
The court also found that 5% of ACCT membership was located in Oregon and 2.4% of its inspectors are based in Oregon, and over the past ten months 3.5% of its standards had been sold to Oregon residents.
Although the business ACCT conducts in Oregon is not overwhelming, the Court concludes that the nature and quality of ACCT’s contacts with Oregon via its website are sufficient to satisfy the purposeful direction test.
The court summed up its analysis this way.
In any event, even if ACCT’s reach into Oregon via its website was not sufficient, standing alone, to confer personal jurisdiction, the Court finds that ACCT’s reach into Oregon went beyond mere solicitation of members and sales through its website.
The court then looked at the relationship between the two defendants Synergo and ACCT.
The Court finds that ACCT directly targeted Oregon through the following actions: ACCT’s certification of Oregon-based Synergo as a PVM, advertising Oregon-based Synergo as a PVM (including recommending that consumers hire Synergo), and setting standards for the inspection of challenge courses, to which ACCT required Synergo to adhere. Specifically, ACCT established and promoted PVM designations for companies, including Synergo, that successfully complete the application and accreditation process, which can take up to 18 months to complete, and includes a site visit of one-to-three days in duration. http://www.acctinfo.org/page/PVMApplication (last visited May 20, 2016). ACCT describes the process as “a stringent review which determines an applicant’s adherence to ACCT Accreditation Policies and Procedures and its good faith commitment to ACCT Standards.”
ACCT even had a link on its website to the Synergo website. Synergo, in turn prominently displayed its membership in the ACCT on its website. The court found this relationship and promotion of Synergo established purposeful direction into Oregon. Thus the first prong of the test was met.
The second prong, the Relating to the Forum test was scrutinized next. This test looks at “the specific personal jurisdiction test requires a plaintiff to demonstrate that the claims arise out of, or are related to, defendant’s forum-related activities.” The courts analyze this prong with a “butt for test.”
This was a simple analysis in this case.
Almquist has alleged that “but for” ACCT promulgating deficient safety standards, she would not have fallen and sustained injuries in Oregon. Thus, the contacts ACCT had with Oregon–i.e., certifying Synergo and allegedly setting inadequate course inspection standards to which Synergo was required to adhere–are also the conduct that give rise to Almquist’s claims. Accordingly, the second prong of the specific personal jurisdiction test is satisfied here.
Courts and many long-arm statures give deference to the state where the accident occurred in tort claims. Consequently, this test is superfluous if the accident occurred in the state.
The final prong is a reasonableness test. This is a simple test that balances the needs of both parties and the costs, both in terms of time and money, in having the trial in one location or another. One way of looking at this was argued by the ACCT, that other forums are just as reasonable as Oregon to conduct the trial.
The court looked at the burden of litigating in Oregon to the ACCT. This test is very difficult to overcome if the court has found that the defendant has a relationship with the forum state. “…unless the inconvenience is so great as to constitute a deprivation of due process, it will not overcome clear justifications for the exercise of jurisdiction.” Consequently, the modern conveniences that allow companies to sell to the forum state are also such that allow litigation in the forum state to be easier.
The major hurdle that the ACCT could not overcome is the accident occurred in Oregon, and the injured plaintiff lived in Oregon.
The court then looked at Oregon’s (the people of the state of Oregon) in litigating in Oregon.
To make this determination, the Court focuses on the location of the evidence and witnesses. Caruth,. The evidence and potential witnesses reside in Oregon, Washington, California, and Illinois. As such, one party must litigate in a foreign venue. While ACCT argues that its witnesses are located in “other states,” it does not contend that its burden is greater than Almquist’s were she forced to litigate elsewhere. In addition, this factor is “no longer weighed heavily given the modern advances in communication and transportation.”
The next analysis is the convenience of litigating in Oregon. The fact that the plaintiff was a paraplegic would sufficiently increase the burden and cost of litigating in a foreign state. The court also must look at whether or not an alternative forum exists that would have a fair trial. Both Delaware and Illinois would meet this requirement.
However, looking at all the tests, the stronger requirements to litigate were in Oregon and the greatest burden would be placed on the plaintiff if she were forced to litigate out of Oregon.
Applying the seven-factor test, the Court concludes that exercising personal jurisdiction over ACCT is reasonable, and comports with fair play and substantial justice. The first, fourth, fifth, and sixth factors weigh in favor of Almquist, although the sixth factor is given little weight. The second and seventh factors weigh in favor of ACCT. The third factor is neutral. Although some factors weigh in favor of ACCT, it did not present a “compelling case” that exercising jurisdiction in this Court is unreasonable.
The ACCT motion was denied.
So Now What?
This case is far from over. Discovery is just starting and many more motions will be filed, and may be appealed before a settlement or trial. When faced with a paraplegic as a plaintiff, settlement is usually the preferred result because a jury can give unlimited an almost unlimited amount of money. On top of that the settlement can be structured to provide the best benefits to the plaintiff.
However, this case is another example of the cost of creating standards rather than best practices or something other forms of help. The idea would have also been a lot easier if ACCT had not “qualified” people to inspect courses. No one is “qualified” by anyone to inspect highways, buildings, ball parks, except by state law.
State law means an Engineer, etc., licensed by the state to inspect. This is the second case in three years where an inspector has been sued for allegedly missing something during an inspection. See Bad luck or about time; however, you look at this decision, you will change the way you work in the Outdoor Recreation Industry.
If you are inspecting, you better identify every issue and let the client know. You cannot say it’s not that important it because it will become important. After that it is up to the client to deal with your inspection. Which may the cost the client a lot. See Serious Disconnect: Why people sue.
This case was not an “if” case, but a when a case. You make standards not based upon a national organization such as ANSI or ASTM; you can expect to be sued for how you created the standards and what the standards say.
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