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Truitt v. Westlake Hardware, Inc.

United States District Court, E.D. Missouri, Northern Division

May 22, 2015

KARLA A. TRUITT, Plaintiff,
v.
WESTLAKE HARDWARE, INC., and KRAUSE-WERK gMBh & CO. KG Defendants,

OPINION, MEMORANDUM AND ORDER

HENRY EDWARD AUTREY, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on Defendant Krause-Werk’s Motion to Dismiss Plaintiff’s Complaint for Lack of Personal Jurisdiction Pursuant to Fed.R.Civ.P. 12(b)(2). [Doc. No. 18]. Plaintiff has filed a Response in opposition to the Motion, and Defendant has filed a Reply. For the reasons set forth below, the Motion is denied.

Facts and Background[1]

Plaintiff’s Complaint alleges the following:

Defendant Krause - Werk GmbH & Co. KG (“Krause-Werk”), is a German company with its corporate headquarters located in Alsfeld, Germany. Germany is a member nation and signatory of the Hague Service Convention Treaty.

Plaintiff alleges that at all relevant times, Defendant Krause-Werk has conducted business in the State of Missouri. Krause-Werk has transacted business in the State of Missouri, has made contracts within the State, has committed tortious acts within the State, has caused injury to a person residing within the State and its products, designed, tested, labeled and manufactured elsewhere, were sold and used within the State of Missouri in the ordinary course of trade or use.

Specifically, Defendant Krause-Werk committed tortious acts in the State of Missouri in that it, acting individually, and/or through its agent(s), alter ego(s), partner(s) and/or joint venture(s) designed, tested, labeled, manufactured, distributed, marketed, advertised and sold the defective subject ladder for release into the stream of commerce, knowing that it could be used in the State of Missouri, and the subject ladder was in fact both sold and used in the State of Missouri, causing serious injury to Plaintiff Karla Truitt, a Missouri resident. Defendant Krause-Werk is subject to the jurisdiction of this Court.

Defendant Krause-Werk was founded in 1900 and, since that time, has been actively engaged in the design, manufacture and distribution of various ladders and other climbing and scaffolding products.

Sometime around 1980 Defendant Krause-Werk designed, developed and patented a model of articulated ladder it named “Multi-Matic.” Krause-Werk also registered “Multi-Matic” as a trade name with the United States Patent and Trademark Office. Krause-Werk then began manufacturing the “Multi-Matic” ladder in its manufacturing and marketing facilities in Germany, Poland and Hungary, which it then sold throughout Europe and in the United States. During the mid-1980s Defendant Krause-Werk sold about two thousand (2, 000) of its overseas manufactured “Krause Multi-Matic” ladders to consumers in the United States, via a distributor company it hired named DeMarco, located in Des Plaines, Illinois.

In 1987 Krause-Werk formed a wholly-owned subsidiary for the purpose of distributing its ladders in the United States, naming the company’s new U.S. arm, “Krause, Inc., ” and incorporating it under Illinois law, with a principal place of business in Roscoe, Illinois. Defendant Krause-Werk was the sole provider of all start-up capital and the sole owner of all corporate stock in “Krause, Inc.”

Gunther Krause, who was the Owner, General Manager and Executive Director of Defendant Krause-Werk also served as the President and sole Executive Director of “Krause, Inc.”

Defendant Krause-Werk provided the financial capital and the original production equipment to form the Rockford, Illinois “Krause, Inc.” facility. Defendant Krause-Werk also sent employees from Germany to train their American counterparts in the manufacturing of the Multi-Matic ladders. The “Krause, Inc.” operation in Illinois was converted to a manufacturing facility and began to also manufacture the Kraus Multi-Matic ladder it was already distributing throughout the United States.

Ed Hansen, Director of Operations for “Krause, Inc., when designated in prior litigation, explained in deposition testimony in 1995 that “Krause, Inc.” was Defendant Krause-Werk’s “plant in the United States.”

Defendant Krause-Werk continued as the sole owner of the copyrights to the name “Multi-Matic” and the emblem placed on the ladders sold in the U.S. – the same name, emblem and insignia placed on Krause-Werk’s ladders manufactured and sold in Europe.

By the early 1990s, Defendant Krause-Werk and its “Krause, Inc.” facility had received notice of a number of instances in which U.S. consumers were injured or even killed while using Multi-Matic ladders over the years, including other claims and lawsuits.

In 1995 Defendant Krause-Werk executed a licensing agreement with its “Krause, Inc.” subsidiary under which both entities had mutual responsibilities to share technical information about the Multi-Matic ladder – including the subject ladder that was eventually sold to Plaintiff Karla Truitt in Missouri.

The overall design of the Krause Multi-Matic ladders and its hinges, as patented by Defendant Krause-Werk, remained the same, while subtle changes were made to the material and coating used for the locking bolt during the early 1990s.

In 1997 Defendant Krause-Werk ordered its plant in the United States, the “Krause, Inc.” facility, to perform a re-design process on their Krause Multi-Matic ladders, leading to a change in the material used for the locking bolt (from zinc to powdered steel). Defendant Krause-Werk was kept informed during the re-design process. After the locking bolt had been selected as the component for alteration and the change made from zinc to powdered steel, Defendant Krause-Werk performed its own testing in Germany on the locking bolts using the new material. Following the subtle change to the locking bolt material, Defendant Krause-Werk and its U.S. subsidiary began to receive an even higher rate of claims and lawsuits for injuries and deaths suffered while using Krause Multi-Matic ladders in the United States.

In 1998 a recall was performed in the U.S. and Canada that included only a small selection of the Krause Multi-Matic ladders that had been sold since the 1980s.

In 2000 Defendant Krause-Werk put its wholly-owned U.S. subsidiary, “Krause, Inc., ” into a bankruptcy, eventually liquidating the assets, copyrights and patents it owned in the U.S. through the “Krause, Inc.” dissolution. Defendant Krause-Werk still designs, manufactures, markets and distributes ladders, and other climbing and scaffolding products throughout Europe from its production and marketing facilities located in Germany, Poland, Hungary, Russia and Switzerland.

“Krause, Inc., ” after having received all of its financial capital, start-up capital and operating equipment from Defendant Krause-Werk, remained undercapitalized by its sole owner Krause-Werk and is now insolvent.

Plaintiff further claims that Defendant Krause-Werk so dominated the finances and control of “Krause, Inc.” so as to render the latter its mere alter ego, Defendant Krause-Werk left “Krause, Inc.” undercapitalized, leading to its insolvency and thereby causing injury or unjust loss if Plaintiff is not allowed to recover from Krause-Werk, thereby justifying the piercing of the corporate veil; All of the acts and omissions, and jurisdictional acts and conduct of “Krause, Inc.” are chargeable to Defendant Krause-Werk as “Krause, Inc.” was merely operating as its agent; c. All of the relevant acts, omissions and jurisdictional contacts and conduct of “Krause, Inc.” were performed while it functioned and/or acted as either or both a joint venture or general partner of Defendant Krause-Werk, and acts are therefore chargeable to Defendant Krause-Werk as though committed directly by it.

In July of 2001, Plaintiff Karla Truitt bought a Krause Multi-Matic ladder off the shelf at the Westlake Hardware Store in Kirksville, Missouri.

On July 3, 2009, Plaintiff was preparing to mount a flagpole bracket on her home in Kirksville, Missouri. She placed the Krause Multi-Matic articulated ladder she purchased at Westlake’s Kirksville, Missouri Hardware store, on a level concrete surface and situated it to be used as a six-foot folding ladder. After deploying the locking bolt mechanism, Plaintiff climbed on the ladder, but it suddenly collapsed despite the fact the fact that the hinges looked and felt as though they were fully locked. Plaintiff fell through the ladder and to the ground. Plaintiff suffered a type six tibial plateau fracture in her left leg, requiring an open reduction internal fixation surgery on July 7, 2009, along with other painful procedures and ongoing medical care and treatment.

Defendant Krause-Werk developed, designed, tested, assembled, manufactured, labeled, distributed, marketed, advertised, and sold the subject ladder in the ordinary course of its business, both directly and through the conduct of its alter ego, agent, joint venture and partner “Krause, Inc.”

Defendant Krause-Werk, as a designer, manufacturer, marketer, distributor and seller of ladders, had a duty to use due care in the design, manufacture, testing, assembly, labeling, distribution, marketing, sale and post-sale conduct relating to such products, including the subject ladder.

At the time Defendant Krause-Werk sold the subject ladder, as well as on July 3rd, 2009 it was in a defective and unreasonably dangerous condition when put to reasonably anticipated uses, by reason of its design, manufacture, warnings, labels and instructions, in that one or more of the ladder’s locking mechanisms could appear locked to the user when it was not fully locked – a condition often called “false locking” – or, one or more of the locking mechanisms could become unlocked during foreseeable uses. The subject ladder was ...


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