California State Automobile Association Inter-Insurance Bureau v. John Guest USA, Inc. et al

Filing 84

ORDER by Magistrate Judge Bernard Zimmerman granting 48 Motion to Dismiss for Lack of Jurisdiction (bzsec, COURT STAFF) (Filed on 11/3/2010)

California State Automobile Association Inter-Insurance Bureau v. John Guest USA, Inc. et al

Doc. 84

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CALIFORNIA STATE AUTOMOBILE ASSOCIATION INTER-INSURANCE BUREAU, as subrogee of George Cogan, and Mary Frances Allen, ) ) ) ) ) ) Plaintiff(s), ) ) v. ) ) ) JOHN GUEST USA INC.; FRANKS ) CONSUMER PRODUCTS INC. and ) DOES 1 THROUGH 25 inclusive,) ) Defendant(s). ) ) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

No. C09-2432 BZ ORDER GRANTING DEFENDANT JOHN GUEST INTERNATIONAL'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

In this subrogation action, California State Automobile Association Inter-Insurance Bureau ("CSAA") alleges that John Guest USA, Inc. ("Guest USA"), John Guest International Limited ("Guest International"), and Franke Consumer Products, Inc. are liable for a defective water filter that caused damages to individuals insured by CSAA.1 Guest International,

a British corporation, has appeared specially and moved to All parties have consented to my jurisdiction for all proceedings including entry of final judgment, pursuant to 28 U.S.C. § 636(c). 1
Dockets.Justia.com
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dismiss the case against it for lack of personal jurisdiction. Because Guest International is only an intermediate holding company, and another John Guest entity manufactured the allegedly defective product, I GRANT Guest International's motion to dismiss. CSAA is GRANTED LEAVE TO AMEND its

complaint so that it may add John Guest Limited as a party to this lawsuit. As the party invoking the Court's jurisdiction, CSAA bears the burden of establishing personal jurisdiction over Guest International. Rio Properties, Inc. v. Rio Int'l California's

Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).2

long arm statute, Code of Civil Procedure § 410.10, allows the exercise of personal jurisdiction on any basis consistent with the federal constitution. Accordingly, a forum state may

exercise personal jurisdiction over a nonresident defendant only if the defendant has certain "minimum contacts" with the forum "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). In the Ninth Circuit,

"litigation against an alien defendant requires a higher jurisdictional barrier than litigation against a citizen from a sister state." Frank Sinatra v. National Enquirer, Inc., Courts may

854 F.2d 1191, 1199 (9th Cir. 1988)(citing cases).

exercise either general or specific jurisdiction over a

Absent an evidentiary hearing to resolve conflicting testimony, CSAA's burden is to make a prima facie showing that personal jurisdiction exists. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). 2

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nonresident defendant.

Helicopteros Nacionales de Columbia CSAA contends that

S.S. v. Hall, 466 U.S. 408, 414 (1984).

this Court has both general and specific jurisdiction over Guest International. General jurisdiction exists where a defendant's activities in the state are "substantial" or "continuous and systematic," even if the cause of action is unrelated to those activities. Data Disc, Inc. v. Systems Tech. Assoc., 557 F.2d This standard is "fairly high and

1280, 1287 (9th Cir. 1977).

requires that the defendant's contacts be of the sort that approximate physical presence." Bancroft & Masters, Inc. v.

Augusta Nat. Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (internal citations omitted). In support of its motion, Guest International provided evidence that it is a British company which has no physical presence in California and does not do business in California. CSAA does not really dispute this showing. Rather it argues

first that fittings with the trademark "JG" are currently available for purchase in California.3 While there may be

circumstances in which a court may exercise personal jurisdiction over a nonresident defendant that places a product into the stream of commerce, CSAA has provided no evidence that Guest International is the legal entity responsible for these fittings being sold in California or otherwise purposefully directed products to California.
3

See

Although I consider this argument because there was no objection, ordinarily only a nonresident defendant's contacts before the complaint was filed may be evaluated for personal jurisdiction. See Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 913 (9th Cir. 1990). 3

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Asahi Metal Industry Co., Ltd. V. Superior Court of California, Solano County, 480 U.S. 102 (1987); Felix v. Bomoro Kommanditgesellschaft, 196 Cal.App.3d 106 (1987). Guest International is only an intermediary holding company SS it is not the manufacturer or distributor of the fittings. Because CSAA has not shown that Guest International purposefully directed the product into the California stream of commerce, the fact that products bearing the trademark "JG" can be found in California does not warrant jurisdiction over Guest International. CSAA next contends that several references on John Guest's website4 result in general jurisdiction over Guest International because: (1) Guest International holds itself out as the "World Headquarters and Manufacturing Base" of John Guest products; (2) the website directs consumers to contact John Guest in the United Kingdom; and (3) the website refers to the John Guest Group of Companies as being the manufacturer of fittings. These arguments, however, are not persuasive.

For one, passive websites that merely advertise do not result, by themselves, in personal jurisdiction. See Panavision

Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998). Moreover, the information on the website simply consists of generalized references, and some of the material references are disputed by sworn testimony. There is no legal entity Declaration of

named the John Guest Group of Companies. Richard A. Lapping ¶ 6.

And according to the website, John

Guest Limited, and not Guest International, is in fact the
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http://www.johnguest.com 4

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company consumers should contact in the United Kingdom. Declaration of Richard A. Lapping ¶ 9. Lastly, another legal

entity, and not Guest International, manufactures John Guest products.5 Consequently, the information on John

Guest's website does not establish general jurisdiction over Guest International. Lastly, CSAA incorrectly seeks to attribute Guest USA's contacts with California to Guest International. Guest

International and Guest USA are separate and distinct corporate entities, with Guest International operating as a passive British corporation that acts as an intermediate holding company over its indirect subsidiary, Guest USA, a Delaware corporation with its principal place of business in New Jersey. Carl Tronco. See Declaration of Barry Guest; Declaration of Even if Guest USA was subject to jurisdiction in

California, jurisdiction over an indirect subsidiary does not by itself result in jurisdiction over the foreign parent corporation. 2001). Doe v. Unocal Corp., 248 F.3d 915, 925 (9th Cir.

CSAA has provided no evidence that Guest International

controls Guest USA's day-to-day operations or dominates Guest USA in such a manner that they act as single entity. Declaration of Barry Guest ¶ 9. Accordingly, CSAA has not

established that Guest USA is an agent or the "alter ego" of Guest International fails to directly support this factual contention in its supporting declaration. But Guest International does attach Carl Tronco's deposition transcript to Richard A. Lapping's declaration. Tronco is Guest USA's Senior Vice President of Finance and Administration and was deposed by CSAA to determine John Guest's manufacturer. In his deposition, Tronco testified that John Guest Limited, and not Guest International, is the manufacturer. Declaration of Richard A. Lapping, Ex. C at 14. 5
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Guest International, and this Court does not have personal jurisdiction over Guest International stemming from Guest USA's contacts with California.6 See American Tel. & Tel. Co.

v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996); Bowoto v. Chevron Texaco Corp., 312 F.Supp.2d 1229, 1241-42 (N.D. Cal. 2004). Where general jurisdiction is inappropriate, a court may still exercise specific jurisdiction if the defendant has sufficient minimum contacts with the forum state which are related to the plaintiff's claim. Data Disc, Inc. v. Systems

Tech. Assoc., 557 F.2d 1280, 1287 (9th Cir. 1977). In order to find specific jurisdiction: "1) the nonresident defendant must have purposefully availed himself of the privilege of conducting activities in the forum by some affirmative act or conduct; 2) plaintiff's claim must arise out of or result from the defendant's forum-related activities; and 3) exercise of jurisdiction must be reasonable." Roth v. Marquez, 942 F.2d 617, 620-21 (9th Cir.

1985)(emphasis omitted). CSAA's arguments in favor of specific jurisdiction are the same as for general jurisdiction. As explained above,

none of those arguments established that Guest International purposefully availed itself of the privilege of doing business in California. Thus, this Court does not have general or

specific jurisdiction over Guest International. Accordingly, IT IS ORDERED that Guest International's For this reason, CSAA's argument that Guest USA employs salespersons in California does not result in jurisdiction over Guest International. 6
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motion to dismiss for lack of personal jurisdiction is GRANTED. CSAA is GRANTED LEAVE TO AMEND its complaint so that CSAA shall file

it may add John Guest Limited as a defendant. its amended complaint by November 15, 2010. Dated: November 3, 2010

Bernard Zimmerman United States Magistrate Judge

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