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Giant Manufacturing loses appeal in Illinois injury lawsuit, trial can proceed

Published September 15, 2017

CHICAGO (BRAIN) — A long-running personal injury lawsuit can proceed after Giant Manufacturing failed to convince the Illinois State Appellate Court that it should be cut loose from the suit because, the Taiwanese company said, it essentially had no ties to the sale of Giant bicycles in Illinois.

The ruling, issued Sept. 8, concluded that Giant Manufacturing had sufficient business ties to the state for the lawsuit to proceed; that Giant Manufacturing, in effect, controlled Giant Bicycle, Inc.'s U.S. operations; and that it was involved in the regular and anticipated flow of products from manufacture to distribution and retail sales.

Janet Kowal, an Illinois resident, is suing Giant Bicycle, Inc. (a U.S. company), Taiwan-based Giant Manufacturing and retailers Westchester Wheels and Hartley's Cycle Shoppe. Kowal had bought a 2007 model Giant road bike from Westchester Wheels (which has since shut down) and had it tuned at Hartley's prior to a ride in Iowa. A few weeks later, the bike's carbon fiber fork failed during a ride and Kowal was injured. She filed suit in 2011 alleging negligence, strict liability and breach of express warranty. 

During the trial, Giant Manufacturing's lawyers asked the trial court judge to dismiss the company from the case, claiming it was not subject to "personal jurisdiction" in Illinois under the "stream of commerce theory," and that the notion of "personal jurisdiction" failed to comport with due process.

The attorneys filed an affidavit from Bonnie Tu, Giant Manufacturing's chief financial officer. In the affidavit Tu said she had never sought authorization from the state to conduct business, had never negotiated, performed or entered into any contracts in Illinois.

She also said that Giant Manufacturing had never shipped products, maintained offices, employees, agents or bank accounts in the state. In addition, Tu said that the manufacturer had never advertised, solicited business and that the company had never paid income taxes in Illinois.

Instead, the manufacturer claimed that Giant Bicycle Inc., with offices in California, was the exclusive distributor of Giant bicycles and that Giant Bicycles Inc. was not a wholly-owned subsidiary of Giant Manufacturing.

Giant Manufacturing further claimed that Giant never had a contract with Westchester Wheels; that it does not instruct Giant Bicycles Inc. where to distribute its bikes in the U.S.; that it did not take part in authorizing Giant dealers nor determine which dealers to authorize.

And Giant Manufacturing further claimed it had no formal agreement with Giant Bicycles Inc. for the distribution and sale of Giant-branded bikes in the U.S.

But as the trial developed the company acknowledged that it had a warehouse and employees in Elgin, Illinois. It also had to acknowledge that Giant Bicycle, Inc. is a wholly-owned subsidiary of Gaiwin B.V., a Netherlands company, and that Gaiwin B.V. is a wholly-owned subsidiary of Giant Manufacturing.

Kowal's attorneys also presented documents that Giant Bicycles Inc. had advertised in the state and that in July 2014 Giant had listed approximately 40 authorized dealers statewide.

At that point the trial judge denied Giant Manufacturing's motion to be cut from the case, concluding that Giant had sufficient contact with the state and that under Illinois' "long-arm statute" Giant Manufacturing would remain a party to the lawsuit.

Giant appealed that decision to the Illinois Supreme Court, which allowed Giant to appeal the trial judge's decision to the Illinois State Appellate Court.

In its 21-page decision this month, the Appellate Court pointed out that Giant, early in the case, had tried to quash a summons from the Illinois Secretary of State arguing that it wasn't registered in Illinois and had not conducted business in the state.

The court noted that, "Giant Manufacturing's claim that it did not know its bicycles were being sold in Illinois is disingenuous."

In its ruling, which offers a primer on U.S. Supreme Court decisions involving "stream of commerce" decisions (see PDF below), the court found in favor of Kowal.

It concluded that Giant Manufacturing had sufficient contacts in Illinois and that under the "stream of commerce" theory, Illinois law could assert "personal jurisdiction" as long as Giant Manufacturing is involved in the "regular and anticipated flow of products from manufacture, to distribution, to retail sale and is aware that the final product is being marketed in the state."

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