Corporate Counsel Daily, Kentucky has personal jurisdiction over online marketplace sending medical products into Kentucky, (May 21, 2024)

By Robert B. Barnett Jr., J.D.

The court ruled that it had specific personal jurisdiction over an online marketplace that sold medical products that were used and consumed in Kentucky.

In a products liability case involving eye drops contaminated by a dangerous bacterium, a Kentucky federal district court has ruled that it has personal jurisdiction under the Kentucky long-arm statute over the online marketplace defendant because the online marketplace transacted business in Kentucky, contracted to supply goods in Kentucky, and allegedly caused a tortious injury in Kentucky. The court also concluded that the extent of business conducted in Kentucky by the online marketplace satisfied federal due process standards (Gregory v. EzriCare, LLC, No. 23-69-DLB-CJS (E.D. Ky. May 20, 2024)).

Background. The consumer purchased and applied Artificial Tears Lubricant Eye Drops, which were manufactured and distributed by EzriCare and EzriRx, designed and imported by Aru Pharma, Inc., and sold through Walmart and Amazon. As a result of using the eye drops, which were contaminated by the bacterium pseudomonas aeruginosa, the consumer was diagnosed with necrotizing, scleritis, scleromalacia, pseudophakia, anterior blepharitis, and posterior vitreous detachment, which necessitated, among other things, admission to intensive care, multiple hospitalizations, and multiple surgeries. She was later diagnosed with sepsis from the infection.

The consumer and her husband sued several defendants, including EzriCare and EzriRx, in Kentucky federal court for strict products liability, negligent products liability, breach of implied and express warranties, negligent misrepresentation, and violation of the Kentucky Consumer Protection Act. EzriRx (but not EzriCare) filed a motion to dismiss for lack of personal jurisdiction. EzriRx’s argument is that it is an online marketplace that connects pharmacies with wholesellers and that it does not sell directly to sells to consumers.

Personal jurisdiction. Under Kentucky law, personal jurisdiction involves a two-step analysis. First, the court must determine if the defendant’s conduct satisfies Kentucky’s long-arm statute. Second, if so, the court then looks to see if the defendant’s conduct satisfied the federal due process standards, which are broader than the Kentucky long-arm statute.

Kentucky statute. The Kentucky long-arm statute lists nine categories of conduct that may subject a defendant to personal jurisdiction in Kentucky. In addition, of course, the claim must arise from the conduct.

Of the nine categories, the consumer asserted that four applied here: (1) transacting business in Kentucky, (2) contracting to supply services or goods in Kentucky, (3) causing a tortious injury in Kentucky by an act or omission in Kentucky, and (4) causing a tortious injury in Kentucky by an act or omission outside of Kentucky. In essence, the court agreed with the consumer in all four categories.

First, EzriRx was alleged to sell products to Walmart and Amazon, which served the Kentucky market. Second, EzriRx was alleged to have contracts for the manufacture, distribution, and retail sale of products in the U.S., including in Kentucky. Third and fourth, EzriRx was alleged to manufacture, design, formulate, prepare, assemble, test, market, advertise, package, distribute, and sell the eye care product that caused injury in Kentucky.

EzriRx responded that it had no ties to Kentucky, arguing instead that it operated an online marketplace that connects pharmacies and wholesalers. It does not sell directly to consumers.

Establishing personal jurisdiction, the court noted, is “a relatively light burden.” The fact that EzriRx does not sell directly to consumers is largely irrelevant, given that it does business with others in Kentucky. Direct purchase by a consumer is not a requirement of the Kentucky long-arm statute. The allegations of personal jurisdiction were sufficient because they alleged that EzriRx transacted business in Kentucky, contracted to supply goods in Kentucky, and caused a tortious injury in Kentucky by an act or omission inside or outside of Kentucky.

Having established that the alleged conduct fit within the four categories of the long-arm statute, the next question was whether the claim arose from the conduct. Under these facts, the court concluded, it clearly did. The goods were distributed in Kentucky, and the goods caused the injuries that are the subject of this lawsuit. There thus existed, the court ruled, “a reasonable nexus that makes the exercise of personal jurisdiction proper, meeting the forgiving burden.” The Kentucky long-arm statute, therefore, had been satisfied.

Due process. The second of the two-step analysis required the court to determine whether exercising personal jurisdiction over EzriRx would satisfy federal due process requirements. Due process is satisfied if the defendant has sufficient minimum contacts with Kentucky that would mean that exercising personal jurisdiction would not offend traditional notions of justice.

General jurisdiction did not exist because EzriRx maintained no Kentucky-based operations. Specific jurisdiction, however, did exist because (1) EzriRx purposefully availed itself of the privileges of doing business in Kentucky, (2) the cause of action arose from EzriRx’s actions in Kentucky, and (3) EzriRx’s actions had a substantial enough connection with Kentucky to make specific personal jurisdiction reasonable.

Once again, the argument that EzriRx did not sell directly to the consumer was unavailing. It was enough that EzriRx sold its products in Kentucky, which were then consumed in Kentucky. The court concluded that EzriRx clearly satisfied the requirement that EzriRx purposefully availed itself of the privileges of doing business in Kentucky. And, once again, the cause of action was clearly connected to EzriRx’s activities in Kentucky. The third and final factor was satisfied by the argument that Kentucky has a compelling interest in protecting its citizens from harmful products directed for sale in the commonwealth. EzriRx earned revenue in Kentucky and could adequately defend itself in Kentucky. As a result, exercising jurisdiction over EzriRx satisfied federal notions of fair play.

The court, therefore, denied EzriRx’s motion to dismiss for lack of personal jurisdiction.

This case is No. 23-69-DLB-CJS.

Judge: Bunning, D.

Attorneys: Dominic V. Millard (Adams Law, PLLC) for Judith Gregory and Donald Gregory. Clay M. Stevens (Napier Gault Schupback & Stevens, PLC) for Ezricare, LLC and Ezrirx, LLC. Charles H. Stopher (Stites & Harbison, PLLC) for Amazon.com, Inc.

Companies: Ezricare, LLC; Ezrirx, LLC; Amazon.com, Inc.

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