A state appellate court was not convinced by a Taiwanese bicycle manufacturer’s argument that its ties to Illinois are too weak to make it a defendant in a lawsuit brought by a woman who said she was injured when her bike fell apart as she rode it in a long-distance cycling event.
Cyclist Janet Kowal filed suit in Cook County Circuit Court in 2013 against Giant Manufacturing Company Ltd., Westchester Wheels Inc., Giant Bicycle Inc. and Hartley’s Cycle Shop, seeking compensation for injuries she sustained when the front fork of the Giant-brand bicycle she was riding broke. The bike was manufactured by Giant Manufacturing, shipped into the state by Giant Bicycle, sold by Westchester and serviced by Hartley’s before the ride.
Giant Manufacturing moved to dismiss, claiming as a foreign entity it is not subject to personal jurisdiction in Illinois. The Cook County judge hearing the case denied the motion and the manufacturer appealed.
The appellate court affirmed the lower court’s ruling, finding Giant Manufacturing has the required minimum contacts with Illinois to establish personal jurisdiction under the law.
Under the law, a nonresident defendant must have “certain minimum contacts with the forum state” that would make it reasonable to assume the defendant might be called into court there.
Earlier in the case, Giant Manufacturing attempted to quash service of summons, arguing it was not registered with the Illinois Secretary of State and had not transacted any business in Illinois. Explanatory documents later revealed that Giant Manufacturing does not sell any bicycles or components directly to the public or to authorized retailers – distribution of the products made by the company is handled by Giant Bicycle, a wholly-owned subsidiary of Gaiwin B.V., which is in turn a wholly-owned subsidiary of Giant Manufacturing.
Giant Manufacturing argued that at the time Kowal’s bicycle was sold by one of Illinois’ 40 Giant-authorized retailers, it had no formal distribution contract with Giant Bicycle, and said it had no knowledge of or control over where its subsidiary company sold its bikes.
The justices found Giant Manufacturing’s claims that it did not know its products were being sold in Illinois hard to believe, as the company acknowledged its bikes were first sold in the state in 1988, it knew Giant Bicycle had authorized Illinois retailers to sell the bikes and maintained a warehouse in suburban Elgin, and at least two people held top management positions in both Giant Manufacturing and Giant Bicycle.
The court’s opinion affirming the lower court’s ruling was delivered by Justice Jesse Reyes, with Justice Bertina E. Lampkin concurring. Justice Robert E. Gordon concurred with a special opinion.
“In Giant Manufacturing’s corporate structure, it was in effect the owner of Giant Bicycle, its exclusive distributor of Giant-brand bicycles,” Gordon wrote. “Giant Manufacturing in effect set up its business to cover the entire United States through its ownership and control of its exclusive distributor of Giant-brand bicycles. It needed no formal agreement with Giant Bicycles because it owned and controlled the distribution of its product.”
Giant was represented in the action by attorneys with the firm of Pretzel & Stouffer, of Chicago.
Kowal was represented by the firm of Mitchell & Hoffman LLC, of Chicago.