Court: Minnesota has jurisdiction in Samsung vape battery case

A Minnesota man was seriously injured when an electronic cigarette battery exploded in his pocket. Although the battery’s manufacturer, Samsung SDI Co. Ltd. (SDI), argued that Minnesota had no jurisdiction over their South Korean company, the Minnesota Court of Appeals has held that the company will face the lawsuit.

The e-cigarette explodes

In 2019, Shawn Peters bought a battery cell from a Minnesota vape store to use in his e-cigarette device. On Jan. 7, 2020, Peters arrived at work. He had the e-cigarette device in his front left pocket. Suddenly, the batteries in his pocket exploded. He was transported by ambulance to a hospital. Peters suffered second- and third-degree burns to his genitals, thigh, and hand.

E-cigarettes are powered by a battery that powers a heating element. When the heating element is hot enough, it vaporizes the liquid in the device that consumers can inhale.

The battery in Peters’ e-cigarette was made by SDI. It was a 18650 lithium-ion battery cell. SDI is incorporated has its headquarters and personal place of business in South Korea. SDI does not manufacture batteries for the specific purpose of being used in vaping devices; however, they have been used in them.

Peters sued SDI, alleging strict and negligent products liability claims. SDI moved to dismiss, claiming lack of personal jurisdiction. It argued that it was not subject to personal jurisdiction under the Due Process clause since it did not ship or sell its 18650 batteries to Minnesota “for standalone use by consumers.” SDI claimed that its contacts with Minnesota were limited to fully assembled, sealed battery packs to national manufacturers who manufacture things such as golf carts and industrial floor cleaners. It maintained that the company never recommended or authorized that the batteries be used in e-cigarettes. The company also asserted that it did not promote sale of its products, including the 18650 lithium-ion battery cells, to consumers.

Jurisdictional battle

The district court concluded that Minnesota courts have personal jurisdiction over SDI, and the company appealed. While SDI admitted that it “purposefully availed itself of the privilege of doing business in Minnesota” when it shipped sealed battery packs to three Minnesota manufacturers, it maintained that it lacked sufficient minimum contacts to support the exercise of personal jurisdiction over it.

In Minnesota, courts look at five factors to determine whether personal jurisdiction is consistent with due process. The court will look at how many and how meaningful a defendant’s contacts are with the forum state, how closely those contacts relate to the lawsuit, the state’s interest in hearing the case, and the convenience for all parties involved.

“SDI’s only contacts with the state of Minnesota were shipments of sealed battery packs, some of which contained 18650 lithium ion battery cells, to three Minnesota manufacturers,” asserted Christopher Emch, associate at Herbert Smith Freehills Kramer LLP, who represented Samsung.

Emch argued that those battery cells were used in an unauthorized way that SDI did not permit. He maintained that the proper inquiry was not the foreseeability that the products might be swept into the forum states by acts of third parties.

“The proper inquiry is what can reasonably be expected as a result of the defendants’ contacts with the forum,” Emch said.

The appellate panel — Judge Louise Dovre Bjorkman, Judge Diane B. Bratvold, and Judge Randall J. Slieter — first considered the quantity of SDI’s contacts with Minnesota. SDI had numerous and ongoing contacts with Minnesota, selling and shipping approximately 2.9 million 18650 battery cells to Minnesota manufacturers between 2017 and 2022. Evidence also showed SDI knew since at least 2016 that its 18650 batteries were being used in e-cigarettes and sold to U.S. consumers, including in Minnesota.

It also looked at the nature and quality of SDI’s contacts with Minnesota. It found that SDI purposefully availed itself of Minnesota’s benefits and protections by selling and shipping nearly 3 million 18650 batteries to Minnesota manufacturers and entering supplier contracts that included Minnesota choice-of-law and venue clauses. It found that the contracts demonstrated that SDI deliberately engaged in business within Minnesota and anticipated potential resale of its products to consumers.

The court considered the connection between the causes of action and SDI’s contacts with Minnesota. It found that Peters’ claims arise out of or relate to SDI’s substantial business activities in Minnesota, including its sale and shipment of nearly 3 million 18650 batteries to Minnesota manufacturers after learning the batteries were used in e-cigarettes. Although SDI did not sell directly to consumers, evidence showed it anticipated resale of its products for personal use in Minnesota, connecting its in-state activities to Peters’ injury.

It also found that Minnesota has a strong interest in providing a forum for relief when a resident is injured within the state by a defective product purchased locally. Peters, a Minnesota resident, bought and used the battery in Minnesota, where the injury occurred and treatment was received.

The court found that one factor, party convenience, was neutral. Despite logistical challenges for both sides, the court found that convenience does not weigh against exercising personal jurisdiction.

Concluding that four factors weighed in favor of Minnesota’s exercise of specific personal jurisdiction over SDI, and the other was neutral, the court found in an opinion filed Oct. 13 that Minnesota courts have personal jurisdiction over the company.

Past and future litigation

Matt Clark and Greg Bentley, of Bentley & More, represented Peters. The firm has been representing consumers injured by e-cigarettes for over a decade and across the country. While Clark states that battery manufacturers had previously consented to jurisdiction and litigated cases, the strategy changed several years ago. Clark states that battery manufacturers, including SDI, had challenged jurisdiction “pretty vehemently” to “escape responsibility for suit in the United States.”

“The jurisdictional fight is one that is very much a procedural roadblock that the manufacturers are throwing up,” Clark said, asserting that SDI was aware for nearly a decade that its batteries were being used in e-cigarettes.

Clark said that as a result of being engaged in this litigation, the matter of jurisdiction has been heard by four different federal courts of appeal. Their determination of jurisdiction was split, with the 5th and 6th circuits finding that there was jurisdiction, while the 7th and 9th did not.

“There has been this constant battle, and now Minnesota is the latest state which has at least had an appellate court come out with a decision on the jurisdictional issue,” Clark said. He noted that Minnesota had the “strongest grounds” for jurisdiction over Samsung, citing direct contacts with Minnesota companies such as Toro and Polaris.

Part of the reason that the 7th and 9th circuits held differently, Clark states, is that those circuits follow a different jurisdictional test. Additionally, there were not the direct contacts between the manufacturer and forum regarding the batteries seen in the 5th or 6th circuit cases, or in the Minnesota case.

“We’re very happy Minnesota has found jurisdiction because it is a chance to hold them to account,” Clark stated. “We are looking forward to finally having Mr. Peters have his day in court and have the opportunity to hopefully be vindicated.”