Parent Cos. Own Acts Establish Personal Jurisdiction

SK Trading Int’l Co. Ltd. v. Superior Court, A163590 (D1d4 Apr. 12, 2022)

Petitioner in this case is a Korean outfit whose California subsidiary is alleged to have engaged in a conspiracy to manipulate the price of a gasoline blendstock called CARBOB. Petitioner argues that there’s no personal jurisdiction. When the trial court disagreed, it took a writ under Code of Civil Procedure § 418.10(c).

It has long been established that having a domestic subsidiary is not, own its own, enough to give rise to personal jurisdiction over a foreign parent. The test, instead, looks to whether the parent’s own acts are significant enough, and sufficiently related to the claims that it’s fair to hale them into court here. 

In this case, the evidence showed that Petitioner/parent was not just a passive owner of a domestic sub. Parent’s execs took an active role in managing the California-based conduct that was part of the conspiracy. They had a role in hiring key, California-based personnel. They facilitated the creation and operation of a joint venture arrangement through which the conspiracy was carried out. That’s enough to meet the test.

The Court makes an interesting point in a footnote. For a long time, there was a open debate about how closely the in-state conduct needed to relate to the claims to satisfy the test. As I discussed in a post eight years ago, there were basically there takes. Some courts required the conduct to be the cause of the claim, some applied an “arising from or related to” test, and some asked whether the claims and contacts were “substantially connected.” The last test—generally viewed as the most liberal—had been adopted by the California Supreme Court. See Snowney v. Harrah’s Entmt. Inc., 35 Cal.4th 1054, 1068 (2005). But subsequent decisions of the U.S. Supreme Court—including a case that reversed the Cal Supremes—appear to have settled on the “arising from or related to” standard. See Bristol-Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773, 1781 (2017) (casting doubt on the adequacy of substantial connection); Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S.Ct. 1017, 1026 (2021) (rejecting proof-of-causation requirement).

Writ denied.

Relatedness Is Not Liability

Bader v. Avon Prods., Inc., No. A157401 (D1d4 Sept. 29, 2020)

Plaintiff in this case is a lifelong Californian who claims she got mesothelioma from a lifetime of using Avon products containing talc that was allegedly contaminated by asbestos. Avon objected to personal jurisdiction, claiming that Plaintiff had not satisfied the “relatedness” prong of the specific jurisdiction inquiry, which asks whether the plaintiff’s claims are substantially connected to the defendant’s in-state contacts. The trial court found that relatedness had not been established and dismissed for lack of personal jurisdiction.

Avon’s relatedness argument here is, charitably, a stretch. Plaintiff says Avon sold her talc products in California and that the talc gave her cancer. That seems like it should be enough relatedness for specific jurisdiction. (Generally, in products liability cases, relatedness arguments come up when plaintiffs engage in forum shopping by suing where they have only tenuous connection, such that their injuries have little to do with the defendant’s in-forum sales. Like when someone from Iowa sues in California based on a product that was purchased in Iowa.) 

Avon, however, says that the Supreme Court’s rejection of California’s “sliding scale” relatedness test in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1776 (2017) also requires Plaintiff to show that the talc that Avon sold her in California actually contained asbestos in order to establish personal jurisdiction. The Court of Appeal rejects the argument, more kindly than I would. Because it’s basically nonsense. 

Sliding scale relatedness was a short lived effort to concoct a junior varsity version of general jurisdiction after the Supreme Court limited general jurisdiction to states where the defendant is “essentially at home.” See Daimler AG v. Bauman, 134 S. Ct. 746 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011). Skirting that rule, a 4-3 majority of the California Supreme Court held that when a defendant has lots and lots of connections in the forum state—sort of akin to the “systematic and continuous” test that applied for general jurisdiction pre-Goodyear and Daimler, see Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)—the nexus between the defendant’s contacts and the plaintiff’s claims could be pretty tenuous. But the U.S. Supreme Court granted cert from that decision, ultimately finding that the sliding scale test was inconsistent with due process. Bristol-Myers, 137 S. Ct. at 1781–82. Specific jurisdiction thus requires some substantial relationship between the contacts and the claim irrespective of what other non-claim related contacts the defendant might have in the forum, regardless of how significant those contacts are.

So far, all good. 

But what neither Bristol Meyers nor any other court has ever said is that, to show relatedness, the plaintiff has to affirmatively prove, as jurisdictional matter, that the defendant’s in-forum sales actually caused her injury. That would make the test for personal jurisdiction—a question usually resolved at the outset of the case—impossibly high and unduly complicated. So high and complicated that a plaintiff couldn’t hale a defendant into a court in her home state for selling her an allegedly defective product in her home state unless she arrives at the courthouse on day one loaded for bear with expert testimony on causation. That doesn’t make any sense.

Reversed.

The Avails of Sales

Thurston v. Fairfield Collectables of Ga., LLC,  No. E072909 (D4d2 Aug. 26, 2020)

Defendant, which is located in Georgia, sells models over the Internet. It doesn’t have employees or stores in California, but it makes about 8 percent of its sales—about $350k annually—to customers here. Plaintiff, who is blind, brought an Unruh Act claim alleging that Defendant’s website did not accommodate her disability. The trial court quashed service for lack of personal jurisdiction.

So that gets us into the morass that is personal jurisdiction over the Internet. Personal jurisdiction requires: (1) contacts that demonstrate purposeful availment of the law of the forum state; (2) a connection between the contacts and the claim; and (3) the satisfaction of a gestalt test of overall reasonableness.

There are a whole bunch of tests for personal availment in the Internet context. The easiest one looks to whether the defendant used its Internet presence to make a substantial amount of sales to persons within forum state. Other tests also look for some state-specific direction of activity. The Court of Appeal here says that substantial sales are enough. But even if more direction were needed, there was some evidence that Defendant also mailed catalogs to Californians who requested them.

The Court says that relatedness is also satisfied. Even though Plaintiff never actually bought anything, her interaction with the website through which Defendant sold stuff to Californians was good enough. 

Finally, the exercise of jurisdiction was reasonable. Although Defendant argued that it was unfair to force it to comply with the laws of 50 different states, the jurisdiction question is different than the choice of law one. Just because Defendant can be made to litigate here, doesn’t mean California law will ultimately apply. 

Justice Menetrez dissents. His point is basically about relatedness. Because Plaintiff didn’t buy anything, her claim isn’t really related to any of Defendant’s California sales, regardless of volume. Her claim is, instead, based on the way that Defendant operated its website. But nothing about that purposefully availed itself of California. To me, that seems like a pretty good point.

Affirmed.