Quanta Computer Inc. v. Japan Commc’ns Inc., No. B280042 (D2d5 Mar. 16, 2018)
TaiwanCo contracted to make some phones in Taiwan and sell them to JapanCo in Japan. Presumably to pick a neutral forum, the contract chose California law and laid exclusive forum in California, despite the fact that there’s basically no connection here.
TaiwanCo sued JapanCo in L.A. Superior on various contract based theories. But JapanCo moved to dismiss on forum nonconveniens grounds. The trial court found that the contractual selection meant that ordinary nonconvieniens considerations didn’t apply. Nonetheless, the trial court declined to enforce the contract's forum selection and granted the motion because litigating a case with no connection whatsoever to California created an undue burden on the state court system.
The Court of Appeal affirms. It makes clear that the choice of law and venue gave the trial court jurisdiction. But even when normal nonconveniens factors don’t apply due to a contractual selection, a court still has discretion to dismiss under Code of Civil Procedure § 410.30(a) if a California forum is unfair or unreasonable. Here, the trial court didn’t abuse that discretion by dismissing based on its belief of the lack of any connection to California created an unneeded burden on state courts.
A lurking issue—which wasn’t really briefed by the parties—is § 410.40, which gives California courts jurisdiction over lawsuits against foreign companies that arise from contracts worth over $1 million and that chose California law and venue. The law was enacted to attract high-end legal work to California, its litigators, and its courts, even if the only connection to the state is the parties’ consent to forum here. The Court of Appeal, however, says that suits with jurisdiction under § 410.40 are subject to statutory forum nonconveniens considerations under § 410.30. Apparently, § 410.40(b) used to contain an express carve out stating that § 410.30 didn’t apply to such a case, but the Legislature let it sunset. According to the Court, that means that the Legislature effectively recognized that cases within § 410.40 are subject to some limited nonconveniens considerations.
Affirmed.
Justice Baker dissents. As he sees it, the whole purpose of § 410.40 was to open the courts of California to this type of foreign dispute. If a lack of connection to California is sufficient to merit dismissal in this, it would equally merit dismissal of “any garden-variety section 410.40 case.” In which case the exception created by the majority eats the rule.
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