In its 2011 legislative session, the Alabama Legislature made significant changes affecting the construction industry, specifically relating to the Prompt Payment Act and the Statute of Repose.  This article provides practitioners with an update on those amendments.

A.      Prompt Payment Act

Since 1995, Alabama law has provided a Prompt Payment Act, Ala. Code § 8-29-1 et seq., to assist contractors and subcontractors with recovering prompt payment for their services on construction jobs.  The 2011 amendments modified the maximum retainage provisions included in the Act.  These amendments went into effect on September 1, 2011, and apply to contracts entered into on or after that date. 

The maximum retainage allowed to be withheld by the owner is 10% of the estimated amount of work properly done and the value of materials stored onsite or suitably stored and insured offsite.  Ala. Code § 8-29-3(i).  After 50% project completion has been accomplished, no further retainage may be withheld.  Id.

In practical terms, therefore, an owner is limited to retaining 5% of the total contract sum as security for proper completion of the job (10% of earned payments for the first half of the job). 

Contractors and subcontractors are limited by the same caps.  Any retainage withheld in excess of the allowable amount will accrue interest at the rate of 1% per month (12% per annum).

The owner is required to release and pay retainage to the contractor for work completed on any construction contract no later than sixty (60) days after completion of the contractor's work as defined in its contract or "substantial completion" of the project, whichever occurs first.  Ala. Code § 8-29-3(l)(1).  "Substantial completion" means "the stage in the progress of the project when the project or designated portion thereof is sufficiently complete in accordance with the contract documents with all necessary certificates of occupancy having been issued so that the owner may occupy or use the project for its intended purpose."  Ala. Code § 8-29-3(l)(2).

The contractor is required to release and pay retainage to its subcontractors for work completed in accordance with the payment terms agreed to in the parties' contract, but if payment terms are not agreed to, then within seven (7) days of receipt of payment from the owner.  Ala. Code § 8-29-3(l)(1); Ala. Code § 8-29-3(b).  Owners, contractors, and subcontractors may condition payment on the receipt of a full release of any lien of the contractor, subcontractor, or sub-subcontractor for the amount of work being paid.  Ala. Code § 8-29-3(n).

The Prompt Payment Act does not apply to:  (1) residential home builders; (2) improvements to real property intended for residential purposes which consist of 16 or fewer residential units; (3) contracts, subcontracts, or sub-subcontracts in the amount of $10,000.00 or less; or (4) contracts with state or local governments (although these contracts do have the benefit of payment bonds under Alabama's Little Miller Act, Ala. Code § 39-1-1 et seq.).  Ala. Code § 8-29-7. 

In addition, the Prompt Payment Act is not applicable in civil actions to enforce mechanics' or materialmen's liens under Ala. Code § 35-11-210 et seq.  Ala. Code § 8-29-8.  Finally, the retainage caps and 60-day rule do not apply to construction projects for or by an electric utility regulated by the Public Service Commission.  Ala. Code § 8-29-3(m).

B.      Statute of Repose.

The 2011 legislative session also saw amendments to the Statute of Repose that significantly limit the potential liability of architects, engineers, and general contractors for damages relating to their work on construction projects.  Ala. Code § 6-5-220 et seq.

The amendments provide that no lawsuit may be filed against any architect, engineer, or licensed general contractor for any cause of action (whether in contract, tort, or otherwise) which arises more than seven (7) years after substantial completion of the construction project.  Ala. Code § 6-5-221(a).  (Formerly, lawsuits could be filed up to thirteen (13) years after substantial completion of a project.) 

Under the statute, a cause of action "arises" at the time of injury or, where the injury is latent in nature, at the time the injury should reasonably be discovered.  Ala. Code § 6-5-220(e).  In general, a lawsuit must be brought within two (2) years after the cause of action arises, Ala. Code § 6-5-221(a), but a latent defect may not cause any actual injury or be discovered for many years after the project has been completed. 

Before the current legislation, a latent defect could create a situation where potential liability could go on almost indefinitely.  Under the amended Statute of Repose, however, if the cause of action does not arise within seven (7) years of substantial completion of the project, then the injured party is forever barred from filing a lawsuit against the architect, engineer, and general contractor on the project. 

The amendments are not retroactive, so the new time limits will only apply to projects that are substantially completed on or after September 1, 2011.

Jaime W. Betbeze
Hand Arendall LLC
Mobile, AL
jbetbetbeze@handarendall.com

The California Supreme Court has blocked an expansion of product liability law in a major decision that provides guidance for other courts facing similar questions and follows a growing trend in this area. In Barbara O’Neil, et al., v. Crane Co., et al. (#S177401; January 12, 2012) the court held that a manufacturer has no obligation to prevent harm from other manufacturers’ defective products used with its product or equipment. Even if a manufacturer could “foresee” the use of another’s defective product with its own, that manufacturer cannot be held liable in strict liability or negligence for damages caused by the other manufacturer’s defective product. 

Events Leading to the O'Neil Opinion
The case involved equipment installed in a U.S. Navy ship’s steam propulsion system. Twenty years later, Patrick O’Neil, a sailor assigned to work on/near the equipment, was exposed to asbestos dust from work performed on gaskets and packing embedded in the equipment and asbestos insulation covering the equipment. Forty years later, he developed a lethal cancer (mesothelioma) from these and other asbestos exposures. The plaintiffs sued the manufacturers of the equipment. However, there was no evidence the asbestos gaskets, packing or insulation from which he was exposed were manufactured, sold or distributed by the defendant equipment manufacturers. Over the 20 years since the initial installation, the original gaskets and packing had been replaced. The Navy, in most instances, specified asbestos replacement gaskets, packing and insulation. 

At trial, the defendant manufacturers moved for nonsuit saying they were not liable because plaintiffs did not introduce any evidence that their equipment was defective and it did not cause Mr. O’Neil’s cancer. Defendants argued that if gaskets, packing and insulation in and on their equipment were a cause of Mr. O’Neil’s cancer, the defendant equipment manufacturers were not responsible because the asbestos-containing replacement products were designed, manufactured or sold by others.

The plaintiffs countered it was “foreseeable” Mr. O’Neil would be exposed to gaskets, packing and insulation in and on the defendant manufacturers’ equipment. They argued that the equipment was originally sold with asbestos gaskets and packing; that the defendant manufacturers knew users would cover the equipment in asbestos insulation; and, that the defendant manufacturers knew that asbestos replacement gaskets and packing would be used with their equipment. The trial court did not agree with plaintiffs and granted the motions for nonsuit finding there was no evidence the equipment was defective because of the asbestos content and determined that defendants’ equipment did not contribute to the cause of the mesothelioma.

However, the California Court of Appeal reversed. It held the defendant manufacturers are liable “for dangerous products with which [their] product will necessarily be used.” (All emphases added.) The court of appeal made no distinction as to which entity was responsible for design, manufacture or distribution of the defective asbestos products from which Mr. O’Neil was exposed. The court of appeal reasoned that because the defendants’ equipment originally included defective asbestos gaskets and packing and knew that they would need to be replaced with asbestos gaskets and packing made by others, they owed a duty to warn. Moreover, the equipment itself was deemed to be defective, not only because of a failure to warn, but also because their equipment “required” asbestos packing, gaskets and insulation.

Supreme Court's Ruling and Policy Holdings
The California Supreme Court reversed the court of appeal. It found no facts in the record that supported the assertion that defendant manufacturers required asbestos replacement gaskets, packing or insulation. There was no evidence the defendant manufacturers’ equipment depended on asbestos materials to operate. The court stated: “Mere compatibility for use with such components [asbestos containing parts] is not enough to render them defective.”  The court concluded that defendants were not liable because their products were not “a legal cause” of the plaintiffs’ injury in strict liability or negligence. Moreover, defendants “had no duty to warn of risks arising from other manufacturers’ products.” (emphasis in original).

Policy
The supreme court found the court of appeal’s decision to be an unwarranted expansion of California product liability law: “(W)e have never held that these responsibilities [under California law] extend to preventing injuries by other products that might foreseeably be used in conjunction with a defendant’s product” (emphasis in original). Whether to apply strict product liability doctrine “in a new setting is largely determined by the policies underlying the doctrine...”. “’[T]he strict liability doctrine derives from judicially perceived public policy considerations and therefore should not be expanded beyond the purview of these policies.’” The court revisited its 1963 decision in Greenman v. Yuba Power Products, Inc.(1963) 59 Cal.2d 57, 63, quoting: “’The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market…’” A year later the California Supreme Court extended the strict liability doctrine to retailers as “’an integral part of the overall producing and marketing enterprise.’” Vandermark v. Ford Motor Co. (1964) 61 Cal 2d 256, 262.

Stream of Commerce
The “marketing enterprise” or “stream of commerce” policy consideration is one of two themes at the backbone of the supreme court’s decision in O’Neil. Where product manufacturers “generally ha[ve] no 'continuing business relationship' with each other," they cannot bear responsibility for other manufacturers’ products. They “cannot be expected to exert pressure on other manufacturers to make their products safe and will not be able to share the costs of ensuring product safety with these manufacturers.” The court said it is “also unfair” to require a manufacturer to “shoulder a burden of liability” for another manufacturer’s product where it “derives no economic benefit from the sale of the product that injured the plaintiff.” A contrary rule would require manufacturers “to investigate the potential risks of all products and replacement parts that might be foreseeably used with their own products and warn about the risks.” This would “impose on manufacturers the responsibility and costs of becoming experts in the manufacturers’ product.” This, it said, is “an excessive and unrealistic burden.” Such a rule could also act “perversely” by “inundating users with excessive warnings” and, quoting New Jersey jurisprudence, “[t]o warn of all potential dangers is to warn of nothing.”

Defendant's Act or Control
An even more fundamental policy lies at the heart of this opinion: Liability is not imposed for an injury unless it was caused “by an act or instrumentality under defendant’s control.” The original asbestos gaskets and packing that defendant manufacturers sold with the equipment were gone when Mr. O’Neil was exposed to asbestos from replacement gaskets and packing manufactured by others. 

The O’Neil opinion (together with two other cases also on appeal and resolved by the O’Neil opinion) stands for the proposition that there is no legal causation for the original product manufacturer where the defective aftermarket replacement part is the source of the harm, even though:
(1) The equipment manufacturer designs the equipment for use with the defective aftermarket product (e.g., asbestos in replacement gaskets and packing);
(2) The manufacturer specifies the use of replacement parts with the same defect;
(3) The manufacturer also supplies replacement parts with the defect in question;
(4) The manufacturer knows that the purchaser of their equipment or product requires that the original equipment contain the defective component and use of the defective replacement part.

Liability Is Not Foreclosed
Likely due to the variety of economic entanglements product manufacturers may have with aftermarket manufacturers’ products, the supreme court conceived of circumstances where liability for another manufacturer’s parts could arise. The court stated in the O’Neil opinion’s opening paragraph that a manufacturer may be held liable for harm caused by another manufacturer’s product where (1) the defendant manufacturer’s own product, although not defective, “contributed substantially” to the harm, or (2) the defendant manufacturer’s (non-defective) product “participated substantially in creating a harmful combined use of the products.” The O’Neil court discusses two appellate cases where the manufacturer’s product would not have been put “into the stream of commerce” but for the manufacturer’s economically beneficial participation in the product that eventually gave rise to the harm. 

Additionally, in a footnote (Fn. 6) the court outlined a hypothetical where a “stronger argument for liability might be made.” If the product/equipment “required the use of a defective product in order to operate” (emphasis in original), the original manufacturer’s product would incorporate the defect and every replacement part would too. The defective replacement parts, though manufactured by others, “would not break the chain of causation.” However, the court warned that in these circumstances, “the policy rationales against imposing liability on a manufacturer for a defective part it did not produce or supply would remain.”

Conclusion

The California Supreme Court appears to have drawn clear rules for precluding liability where an original manufacturer’s product has left its possession or control, but an aftermarket replacement part has ensnared the original equipment manufacturer in litigation. Where the manufacturer does not control or derive direct economic benefit from the defective aftermarket product, it will not be liable. However, the opinion does not build an impregnable wall. The court specifies that an original manufacturer will be liable for another manufacturer’s parts, where the original product contributes substantially or participates in a combined product causing harm. Even under those scenarios, however, imposing liability must not run afoul of the policy rationales supporting the O’Neil opinion. 

Christopher W. Wood
Lisa L. Oberg
McKenna Long & Aldridge
San Francisco, CA
(415) 267-4000 

Connick v. Thompson, 2011 U.S. LEXIS 2594 (U.S. March 29, 2011).

In Connick v. Thompson, the Supreme Court tightened the liability standards for §1983 claims involving the alleged failure to train governmental employees.  The plaintiff in Connick spent 18 years in prison, including 14 years on death row before his convictions were vacated because exculpatory evidence had been withheld by prosecutors at his original criminal trial.  The Court in Connick reversed a $14 million verdict against the District Attorney’s Office that had prosecuted the plaintiff. 

The plaintiff in Connick was initially tried and convicted of attempted armed robbery. The prosecutors in that case failed to disclose the existence of exculpatory scientific evidence.  Because of that conviction, the plaintiff did not testify in his own defense in a subsequent murder trial and was again convicted. One month before his scheduled execution, an investigator discovered the undisclosed evidence from his armed robbery trial.  A reviewing court determined that because the evidence was exculpatory, both of his convictions should be vacated.  Plaintiff then sued the New Orleans Parish District Attorney for his alleged failure to train prosecutors about their obligation to produce exculpatory evidence under Brady v. Maryland, 373 U.S. 83 (1963). 

To place the Connick decision in its proper context, two points bear mentioning.  First, absolute immunity is generally available to prosecutors for conduct that “is intimately associated with the judicial phase of the criminal process,” Imbler v. Patchman, 424 U.S. 409, 413-16 (1976), but that defense is not available to a governmental entity such as a district attorney’s office. Second, vicarious liability is not permitted under §1983.  A governmental entity cannot be held liable for its employee’s constitutional violations that occur in the course and scope of employment.  Rather,  governmental entities can only be held liable for their own illegal acts, which requires “action pursuant to an official municipal policy.”  Monell v. New York City Dept. of Social Servs., 436 U.S. 658, 691 (1978).  Official municipal policy “includes the decisions of a government’s lawmakers, the acts of policymaking officials, and practices so persistent and widespread as to practically have the force of law.” Connick, 2011 U.S. LEXIS 2594 at * 17-18.

Connick’s Analysis of the Failure to Train Issue.

The Supreme Court explained that governmental liability under §1983 “is at its most tenuous [point] where a claim turns on a failure to train.”  Connick, 2011 U.S. LEXIS at *18.  Training claims are “far more nebulous, and a good deal further removed from the constitutional violation” than the typical §1983 policy claim addressed under Monell.  Oklahoma City v. Tuttle, 471 U.S. 808, 822-23 (1985).  Thus, §1983 liability can be triggered only when the alleged policy of failing to properly train employees amounts to “deliberate indifference” to the rights of those who come in contact with the inadequately trained employees.  City of Canton v. Harris, 489 U.S. 373, 388 (1989).

Deliberate indifference requires proof that a governmental official “disregarded a known or obvious consequence” of his or her action or decision.  Board of  Comm’rs of Bryan Cty. v. Brown, 520 U.S. 397, 410 (1997).  Deliberate indifference in this context can be established when governmental policymakers are on notice of an omission in their training program is allegedly causing constitutional violations and do nothing.   That “policy of inaction” is deemed to be “the functional equivalent of a decision by the [governmental entity] itself to violate the Constitution.”  Canton, 489 U.S. at 395. 

The Supreme Court in Canton recognized that §1983 training liability can arise in two potential scenarios.  The first is where a series of constitutional violations makes the need for training obvious.  489 U.S. at 395.  A pattern of constitutional violations is typically necessary to demonstrate that a governmental entity was “deliberately indifferent” to the constitutional rights of its citizens.  Bryan Cty., 520 U.S. at 409.  However, the Supreme Court in Canton also hypothesized that §1983 training liability could arise in the absence of a pattern of violations when the need for training on a particular issue was obvious at the outset.  The Court suggested a police officer’s use of deadly force was an example where training should be provided at the outset even in the absence of a pattern of constitutional violations.  Canton, 489 U.S. at 390, n. 10.

The plaintiff in Connick proceeded under that latter theory and the Court summarily rejected his claim.  2011 LEXIS at *22.  The Court in Connick observed that plaintiff’s claim did not fall “within the narrow range of . . . hypothesized single-incident liability” scenarios where the need for training at the outset was obvious.   Id. at *23.   The Court noted that armed police must make split-second decisions with life or death consequences, whereas prosecutors receive training in law school, have ongoing mandatory continuing legal education requirements and ethical duties with which they must comply.  Id. at *23-28.  In the Court’s view, this legal training “is what differentiated attorneys from average public employees.”  Id. at *24.

In the ten years preceding plaintiff’s prosecution, four other convictions had been set aside due to the failure by prosecutors in the District Attorney’s Office to produce exculpatory evidence.   In the Court’s view, this did not establish a pattern of violations sufficient to put the District Attorney on notice of the need for additional training.  None of those prior instances involved the failure to produce scientific evidence and none involved a failure similar to what occurred in plaintiff’s case.  Connick, 2011 U.S. LEXIS 2594 at *20-21.

Connick further explained that failure-to-train liability cannot be based upon “contemporaneous or subsequent” conduct.  Id. at *21, n.7.  The Court also observed that failure-to-train liability is concerned with the substance of the training, not its particular format, and rejected the notion that liability could be based on the theory that more or better training would have prevented the type of conduct in question from occurring.   Id. at *30.  The Supreme Court in Connick concluded that failure-to-train liability does not provide courts with carte blanche to micro-manage local units of government or their training programs.  Id. 

Impact of the Decision

The Supreme Court’s decision in Connick limits the circumstances in which failure-to-train liability can be imposed under §1983.  In most instances, a plaintiff will have to demonstrate a pattern of prior constitutional violations of a similar nature before liability can attach under this theory.  This should make pleading §1983 training claims more difficult because the Supreme Court requires complaints to assert enough facts to demonstrate a plausible entitlement to relief.  When a complaint fails to factually assert a pattern of similar constitutional violations, a motion to dismiss should be considered.   Moreover, liability cannot be premised upon assertions that specialized training, or more or better training should have been provided.  Thus, Connick may help to weed out §1983 training claims at an early stage of the proceedings.

While Connick will obviously be helpful in defending §1983 training claims, the decision’s impact may be limited by the Court’s acknowledgment that the legal training which prosecutors receive distinguishes them from other public employees. Nonetheless, in most instances, there can be no §1983 training liability following Connick, absent a pattern of prior constitutional violations of a similar nature.  

About the Author: Steven Puiszis is a partner in the Chicago office of Hinshaw & Culbertson LLP, and is a member of DRI’s Board of Directors.   He also is the Author of ILLINOIS GOVERNMENTAL TORT AND SECTION 1983 CIVIL RIGHTS LIABILITY, (Matthew Bender (Lexis/Nexis), 3d ed. 2009).

DRI’s Judicial Task Force recently issued its report, Without Fear or Favor in 2011, which comprehensively addresses various challenges to judicial independence and threats to the fairness of our system of justice.  These threats are our legal system’s super virus, seemingly immune to any cure and constantly mutating into far more dangerous forms. The types of threats confronting our legal system include budget cuts to state court systems so severe that the periodic closing of courthouses has been required, to proposals to radically alter merit selection systems, including one that would require judges to periodically appear before their State Senate to explain their decisions and justify their continued position on the bench. There was a reason why our founding fathers adopted lifetime tenure for federal judges–to eliminate this type of bully pulpit approach to judicial retention.

DRI’s report does not express a preference for one type of judicial selection method over another. The task force recognizes that no judicial selection method is perfect. Both merit selection and judicial election systems have their pros and cons. Rather, DRI’s report explains that whatever selection method is used in a particular state, there are ways it can be improved, and the report provides a number of suggestions to improve the both types of selection methods. 

One the troubling problems with judicial elections is the torrent of money flowing into state judicial campaigns.  Recent public opinion polls of registered voters cited in DRI’s report demonstrate that the influx of money into judicial elections is viewed by the voting public as a problem.  Even many state court judges share that view. The report cites a poll of 2500 state court judges in which 46% of the judges polled felt that campaign donations have at least “a little influence” on judicial decision making, and 56% expressed the view that judges should be prohibited from presiding over a case when one of the sides has given money to their campaign. 

Therefore, it should come as no surprise that the task force recommends that State Supreme Courts adopt a rule requiring the automatic disqualification of judges who have received a campaign contribution above a specific threshold from any party or attorney appearing before the judge in any case.  As the report was heading to press, New York’s Chief Judge recently proposed that type of automatic disqualification rule based on campaign contributions, and it is hoped that other State Supreme Courts will adopt a similar rule in their respective states. The United States Supreme Court’s decision in Citizens United v. Federal Election Commission, which invalidated limits on campaign contributions makes state judicial disqualification rules more important than ever. If the public’s perception of fairness of our courts is ever lost, immeasurable damage will result to our legal system and the rule of law in America.  Thus, the time to act is now.

The report also recommends that an independent panel of judges be appointed to hear disqualification motions and that weak or nonexistent campaign disclosure laws prevalent in many states be strengthened.  Tougher disclosure rules will shine a light on those special interest groups targeting judicial elections. 

Because judges are being asked to address political or socially sensitive issues with increasing frequency, judicial decisions have become lightening rods for special interest groups on the losing side of those cases. As a result, single issue special interest groups are seeking to turn judicial elections into political referendums as exemplified by the November 2010 Iowa Supreme Court elections. In that retention election, three members of the Iowa Supreme Court were targeted by out of state groups seeking their ouster because of their vote in a controversial decision on same sex marriages. Judges, however, must have the independence to make an impartial decision based on a fair interpretation of the law in light of the facts presented to them even when their decision is politically unpopular. If judges must concern themselves with the latest public opinion polls on hot button issues, the judicial branch will lose its independence and cannot serve as an effective check on the excesses of the legislative and executive branches of state government.

With increased money devoted to judicial elections, the tone and tenor of judicial campaigns has also radically changed. Groups supporting or opposing a judicial candidate are now funding harsh attack ads that either focus on a controversial ruling on a politically sensitive decision or deliberately mischaracterize information about a judge running for election. DRI’s report mentions several notorious examples. 

DRI realizes that many attorneys are busy with their practices, and therefore, may be  unfamiliar with many of the challenges confronting the judiciary and threatening the fairness of our legal system. Thus, the report is intended to sound a rally call to the organized defense bar to become familiar with these issues and take the necessary steps to protect judicial independence and the integrity of our courts.  Thus, the report asks the reader:

• Will you become an advocate against unwarranted attacks on the judiciary or just hope that others will respond to those attacks?
• Will you support amendments to judicial codes requiring disqualification when campaign contributions in judicial elections exceed reasonable limits, or will you ignore the issue of judicial campaign contributions until it directly involves a case you are handling?
• Will you advocate for the development of a process to promptly and fairly resolve judicial recusal or disqualification motions in your state, or will you allow the public’s perception of our legal system’s fairness to be shaped by allowing judges to rule on motions seeking their own disqualification?
• Will you seek adequate funding for our court systems, or simply take a vacation on those days when courthouses around the country cannot afford to open their doors?
• Will you protect the right of an independent judiciary to make politically and popular decisions or stand idly by when special interests seek the roster?

In other words, will you defend our court systems so that the judicial branch can continue to independently uphold justice in your state?

The Ohio Supreme Court recently held that an Ohio court could exercise personal jurisdiction over a nonresident who allegedly defamed an Ohio corporation via the Internet even though the nonresident had never set foot in Ohio.  See Kauffman Racing Equip., LLC v. Roberts, 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784 (Ohio 2010).  The defendant, a resident of Virginia, had purchased an engine block from the plaintiff, an Ohio corporation, made his purchase over the Internet, and never was in Ohio.  Claiming a defect, the defendant sent the engine block to the plaintiff for inspection, which returned it to him unrepaired, claiming post-sale modifications had been made to it.  The disgruntled defendant turned to online message boards, writing that the plaintiff “is less than honorable,” and his postings were “not to get a resolution” but that he had “a much bigger and dastardly plan.”  Id. at ¶¶13, 15.  In support of jurisdiction, the plaintiff offered evidence that it had received at least five inquiries from Ohio residents as a result of the defendant’s online postings.

In deciding the case, the Ohio Supreme Court employed the familiar test of determining (1) whether the state’s long-arm statute and civil rules conferred jurisdiction, and, if so, (2) whether the exercise of jurisdiction would deprive the defendant of his right to due process.  As to the first prong of the test, the court held that the allegedly defamatory comments were considered “published” in Ohio because they were viewed by Ohio residents, which meant that the “alleged tort was committed in Ohio,” thus satisfying the long-arm statute and civil rules.  Id. at ¶42 (citing O.R.C. 2307.382(A)(3); Ohio R. Civ. P. 4.3(A)(3)).  Moreover, the first prong is satisfied “[w]hen defamatory statements regarding an Ohio plaintiff are made outside the state yet with the purpose of causing injury to the Ohio resident and there is a reasonable expectation that the purposefully inflicted injury will occur in Ohio.”  Id. at ¶44.

As to the second prong – due process – the court relied most heavily upon the decision of Calder v. Jones, 465 U.S. 783 (1984), in which the due process rights of the National Inquirer, a Florida resident, were found not to have been unconstitutionally impinged by California’s exercise of jurisdiction over it after it allegedly had libeled “the professionalism of an entertainer whose television career was centered in California.”  Id. at ¶52.  Jurisdiction was proper because “California [was] the focal point of both the story and the harm suffered.”  Id.  Analogizing to Calder, the Ohio Supreme Court noted that in Roberts “the allegedly defamatory statements were communicated to Ohio residents,” and the plaintiff is “an Ohio-based company whose reputation is centered in Ohio and that had engaged in commercial activity with [the defendant] before the controversy.”  Id. at ¶65 (emphasis in original).  Moreover, the defendant should have foreseen the possibility of being haled into an Ohio court because he “not only knew that [the] Ohio resident . . . could be the victim [of his postings], he intended it be the victim.”  Id. at ¶68.  Finally, the defendant had contacts in Ohio through the purchase of the engine block, and Ohio has an interest in the plaintiff obtaining relief.  Id. at ¶¶70-72.

The court concluded that it would “decline to allow a nonresident defendant to take advantage of the conveniences that modern technology affords and simultaneously be shielded from the consequences of his intentionally tortious conduct.”  Id. at ¶74.  The decision was reached four-to-two with one abstention.  The dissent wrote that due process rights are violated by providing “an avenue for any affected Ohioan to sue the originator of any negative post in an Ohio court when the product has been purchased in Ohio and the negative post is read by an Ohio resident,” and that the effect would be to “chill the exercise of free speech.”  Id. at ¶¶80-81.  Will this decision have lasting ramifications for future cases?  Why or why not?