OLIVER et al v. FUNAI CORPORATION, INC.

Filing 98

OPINION. Signed by Judge Jose L. Linares on 12/21/15. (cm )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NORMA OLiVER and MATT TOMS,
individually and on behalf of all others
similarly situated et al,

Civil Action No. 14-cv-04532

Plaintiffs,
OPINION

v.
FUNAI CORPORATION, INC., et al,
Defendants.

LINARES, District Judge.

This matter comes before the Court upon motions by Defendant Funai Corpo
ration, Inc.

(hereinafter “Funai Corp.”) (ECF No. 79, “Corp. Mov. Br.”) and by Defendant
Funai Electric Co.,
LTD. (hereinafter “Funai Electric”) (ECF No. 80, “Electric Mov. Br.”),
seeking dismissal
Plaintiffs’ Second Amended Complaint (ECF No. 73, “SAC”). Funai Corp. seeks
dismissal of
Plaintiffs’ fraudulent concealment and civil conspiracy claims (Counts
I and III, respectively)
under Federal Rule of Civil Procedure 12(b)(6). (Corp. Mov. Br. at

i-u;

ECF No. 79-3, “Corp.

Proposed Order”). Funai Electric adopts the arguments made by Funai Corp.
for dismissal, but
also seeks dismissal of all claims against it for lack of personal jurisdiction pursua
nt to Federal
Rule of Civil Procedure 12(b)(2). (Electric Mov. Br. at i). Plaintiffs have
filed an omnibus
opposition to these motions (ECF No. 91, “Pls.’ Opp. Br.”) and Defendants
have filed separate
replies. (ECF Nos. 96, “Corp. Reply Br.” and 97, “Electric Reply Br.”). Pursua
nt to Rule 78 of
the Federal Rules of Civil Procedure, the Court decides this matter on
the papers.
1

Upon

consideration of the Parties’ submissions, and for the reasons stated below, Defend
ants’ Motions
to Dismiss are granted.
1.

BACKGROUND
A, Parties
PIaintiff Norma Oliver is a citizen of the State of Massachusetts, and
Plaintiff Matt Toms is a citizen

of the State of Arizona. (SAC ¶J1 -2). Defendant Funai Electric is the
parent company of Defendant Funai

Corp. (Id.

¶ 3).

While Funai Corp. is incorporated and exists under the laws of the State
of New Jersey,

with its principal place of business in New Jersey, Funai Electric is a Japane
se company with headquarters
in Japan. (Id.

¶J 3-4).

Plaintiffs allege that “Funai Electric is a global and leading manufacturer
of liquid

crystal display (“LCD”) televisions,” and that “Funai Electric participates
in, engages in, and avails itself
of the United States market and United States consumers through its subsid
iary, Funai Corp. and agreements
between the two entities.” (Id.

¶J

4, 13). According to Plaintiffs, Funai Electric manufactures Funai,

Emerson, and Magnavox brand televisions and distributes these televis
ions through Funai. Corp (Id.
while Funai Corp. distributes and markets those televisions in the United
States. (Id.

¶

¶

13),

14-15). 1

B. Pertinent Facts
This is a putative class action related to the manufacturing, market
ing, and sale of allegedly defective
televisions, Plaintiffs claim that the televisions at issue were market
ed and sold with “faulty components,”
namely, a defective power supply board (PSB). (Id.
routes electricity for the LCD panel.

.

.

.

¶ 7). According to Plaintiffs, the “PSB regulates and

Without a functioning PSB, the LCD screen and panel cannot

operate and the televisions will stop displaying a picture and sound
(without which a television is obviou

sly

1

The Court notes several inconsistencies in the different roles
that the entities are alleged to play in the
manufacturing of the suspect televisions. For example, while Plainti
ffs allege, on the one hand, that Funai Electric
manufactures the televisions, SAC ¶1 13, in the next paragraph,
they allege that both “Defendants” manufacture
the televisions (Id. ¶1 14).

2

rendered useless).” (Id.

¶ 27).

Thus, Plaintiffs allege that the televisions in question often fail outside of

the stated one-year warranty period and ninety-day warranty period for labor, leaving
consumers with little
reprieve. (Id. ¶T 29).
Plaintiffs allege that this defect was known to Defendants, who nevertheless
continued to manufacture,
market and sell the televisions with faulty components to increase their profit
margins. (Id.

¶J

25, 28).

Plaintiffs also claim that Defendants “actively conceal the defect from consum
ers,” and attempt to assuage
any consumer concerns by representing in their service and owners’ manuals
that the LCD panel and screen
will “provide many years of useful life.” (Id.

¶J 30-3 1).

In May of 2012, Plaintiff Norma Oliver (“Oliver”) purchased an Emerson LCD
television from a Wal
Mart in Florida, paying $299.00. (Id.

¶ 42).

According to Oliver, the Emerson LCD television failed in

October 2013, not long after the one-year warranty period, despite the fact that
she had used her television
for approximately 390 hours. Plaintiffs allege that when Oliver called Funai’
s customer support line to
seek a replacement, the employees acknowledged that the cause of the failure
was likely a faulty PSB, but
nevertheless failed to replace the television free of charge. (Id.
more than $85.57 to rectify the problem herself. (Id.

¶ 43).

Oliver claims that she expended

¶ 45).

Plaintiff Toms (“Toms”) claims to have had a similar experience. Specif
ically, Toms states that he
purchased his Magnavox LCD television from a Target in Arizona in Septem
ber of 2012, and that the same
television failed in January 2014, after only 190 hours of usage. (Id.
¶f 47-48). After researching the issue,
Torns believed the problem was a faulty PSB. Toms then installed replace
a
ment PSB, which fixed the
problem with the television. (Id.

¶ 49).

Toms alleges ascertainable losses totaling $72.00. (Id.

¶ 51).

C. Procedural History

Plaintiffs initiated this action on July 17, 2014, and subsequently
filed an amended complaint on
October 20, 2014. (ECF Nos. 1, 14). Thereafter, both Defendants
filed motions to dismiss the Amended
Complaint, which motions this court granted in part and denied
in part. (ECF No. 63, “MTD Op.).

3

As the lead Plaintiffs sought to certify a nation-wide class, this Court first
conducted a choice of law
analysis to determine which States’ laws should apply to Plaintiffs’ claims
. The Court determined that
Arizona and Florida law would apply to Plaintiffs’ consumer fraud claims
, and that New Jersey law applies
to claims of fraudulent concealment claims, civil conspiracy, and breach
of warranty claims. (MTD Op. at
70-21). The Court then considered the arguments raised by each Defend
ant in support of their respective

motions to dismiss.
At the outset, the Court addressed Funai Electric’s 1 2(b)(2) argument of
lack of jurisdiction, deferring
a ruling on same until a determination as to the necessity ofjurisdictional discov
ery on the issue.

However,

the Court agieed with Funai Electric that “Plaintiffs’ substantive allegat
ions against Funai Electric [werel
largely indistinguishable from those asserted against Funai Corp” and that,
“[p]articularly with reference
to fraud claims, Plaintiffs have failed to separately plead the fraudulent acts
of each defendant to satisfy
Rule 9(b).” (MTD Op. at 26). The Court therefore dismissed the
fraud claims against Funai Electric
without prejudice because Funai Electric was not placed on adequate
notice regarding these claims. (Id.).
As to the non-fraud based claims, the Court deferred analysis until
Plaintiffs filed a second amended
complaint shedding light on Funai Electric’s particular involvement
in the allegations. (Id. at 27).
The Court also considered the I 2(b)(6) arguments of Funai Corp. The
Court upheld the sufficiency of
Plaintiffs’ breach of warranty claims (Counts TV and V) and violati
on of the ACFA

based upon concealment

(Count II). However, the undersigned held that Plaintiffs failed to
sufficiently plead a claim of fraudulent
concealment (Count I), which Plaintiffs now reassert in the Second
Amended Complaint. Specifically, the
Court held that Plaintiffs “fail[ed] to plead knowledge or belief
by the defendant of the defect [prior to the
time of Plaintiffs’ purchase] as well as an intention that the other
person rely on it.” (MTD Op. at 16).
Because the Court granted Plaintiffs leave to amend their fraudu

lent concealment claims, the Court deferred

ruling on their related civil conspiracy claims. (MTD Op. at 26).
On July 22, 2015, Plaintiffs filed the operative Second Amend
ed Complaint, attempting to cure the
deficiencies identified by this Court in its earlier Opinion. (SAC)
. Plaintiffs now allege claims based upon
fraudulent concealment (Count I), violation of the Arizona Consu
mer Fraud Act (Count II),
4

civil conspiracy

to commit fraud (Count III), breach of express warranty (Count lv), and violation of the Magnu
sson-Moss
Warranty Act (Count IV). (SAC at 21-28). Both Defendants now move to dismiss the Second
Amended
Complaint. Plaintiffs have filed an onmibus opposition to the motions, and Defendants
have filed separate
replies.
II.

LEGAL STANDARD
For a complaint to survive dismissal, it “must contain sufficient factual matter
, accepted as

true, to ‘state a claim to relief that is plausible on its face.’ “Ashcroft v.
fqbal, 556 U.S. 62, 678

(2009) (citing Bell Ati. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

In determining the

sufficiency of a complaint, the Court must accept all well-pleaded factual
allegations in the
complaint as true and draw all reasonable inferences in favor of the non-moving
party. See Phillips
v. Cntv. ofAllegheny, 515 F.3d 224, 234 (3d Cir. 2008). Additionally, in evalua
ting a plaintiffs
claims, generally “a court looks only to the facts alleged in the complaint
and its attachments
without reference to other parts of the record.” Jordan v. Fox, Rothschild,
O’Brien & Frankel, 20
F.3d 1250. 1261 (3d Cir. 1994).
Regarding Plaintiffs’ fraud claims, Federal Rule of Civil Procedure 9(b)
requires that “[i]n
alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud
or mistake. Malice, intent, knowledge, and other conditions of a person
’s mind may be alleged
generally.” Fed. R. Civ. P. 9(b). “Plaintiffs may satis1’ this requirement
by pleading the ‘date.
place or time’ of the fraud, or through ‘alternative means of injecting precisi
on and some measure
of substantiation into their allegations of fraud.” Lum v. Bank ofAme
rica, 361 F.3d 217, 224 (3d
Cir. 2004), abrogation on other grounds recognized by hi re Insurance Broker
age Litig., 618 F.3d
300, 323 n.22 (3d Cir. 2010). “Plaintiffs also must allege who made a misrep
resentation to whom
and the general content of the misrepresentation.” Id.

5

The Court will first address the 1 2(h)(6) arguments made for dismissal offered by Funai

Corp. Next, the Court will consider Funai Electric’s request for dismissal based on lack of personal
jurisdiction under Rule 1 2(b)(2).

Ii!.

FUNAI CORP’S MOTION TO DISMISS

A. Common Law Fraudulent Concealment Claims

As already settled, New Jersey law applies to Plaintiffs’ fraudulent concealment claim. (MTD Op.

at 8), The elements of fraudulent concealment must also be plead under the heightened standards
of Federal Rule of Civil Procedure 9(b). Byrnes v. DeBolt Transfer, Inc., 741 F.2d 620, 626 (3d
Cir. 1984). The Third Circuit has set forth the following requirements for pleading fraud:
In order to satisfy Rule 9(b), plaintiffs must plead with particularity
“the ‘circumstances’ of the alleged fraud in order to place the
defendants on notice of the precise misconduct with which they are
charged, and to safeguard defendants against spurious charges of
immoral and fraudulent behavior.” Seville Indus. Mach. Corp. v.
Southmost Mach. Corp., 742 F.2d 786, 791 (3dCir.1984). Plaintiffs
may satisfy this requirement by pleading the “date, place or time” of
the fraud, or through “alternative means of injecting precision and
some measure of substantiation into their allegations of fraud.” Id.
Lzan, 361 F.3d at 223—24. With this in mind, the Court turns to New Jersey law.
In order to plead fraudulent concealment in New Jersey, a plaintiff must allege: “(1) a
material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person rely on it; (4) a reasonable reliance
thereon by the other person; and (5) resulting damages.” Gennari v. Weichert Co. Realtors, 148
N.J. 582, 610, 691 A.2d 350 (1997).

6

Funai Corp. contends that Plaintiffs cannot meet the elements of a fraudu
lent concealment claim
because, inter alia, they still fail to plead that Funai Corp. knew of the defect prior
to Plaintiffs’ purchases.
2
(Corp. Mov. Br. at 15, 17-24). Tn response, Plaintiffs direct the Court to the
additional “numerous consumer
complaints that date back to 2011 and beyond” included in the Second
Amended Complaint. (Pls.’

Opp.

Br. at 13). The Court has reviewed these consumer complaints, and
finds that the complaints fail to
adequate show Defendants’ knowledge of the defect.
First, the complaints appear on the websites of third-parties such as Amazo
n and Wal-Mart, and
Plaintiffs have provided no indication that Defendants viewed or
would have viewed those websites.
Secondly, many of the postings, written by unknown bloggers (i.e., “oliveu
babe” and “2ofakind0”), do not
specifically reference a defect with the PSB; rather, they allege genera
l problems with the televisions’
functionality or quality. (See SAC

¶

37 (“I had one of the sensors on the tv break within 2 weeks
of

installation, poor quality manufacturing..

.“);

¶39 (complaining that the television “died after six months”);

¶ 40 (complaining that the television “won’t turn on.”)).

Finally, several of these postings post-date May

and September of 2012, when Plaintiffs Oliver and Toms, respectively,
purchased their televisions. (See ¶
37 (posted April 25, 2013);

¶ 38 (posted May

14, 2013);

¶ 40 (posted October 30, 2012)).

For all of these

reasons, this Court is not persuaded that knowledge of the alleged
defect could be imputed to Defendants
based upon anonymous internet complaints on third-party websit
es. Nor is the Court persuaded that
knowledge can be imputed to Defendants based upon the represe
ntations made in the anonymous internet
complaints that the consumers contacted Defendant via phone
to voice their concerns. (Pis.’ Opp. Br. at
17).
Indeed, this Court has previously explained that imputing knowle
dge of a defect to a manufacturer
based upon an internet posting would mean “that virtually every
consumer product company would be
subject to fraud claims and extensive discovery. All any
plaintiff would be required to show is that a

2

Because the Court agrees that Plaintiffs have failed to plead
the requisite knowledge element, the Court will not
address Funai Corp.’s additional claims of deficiency— namely
, the alleged failure to plead reliance or to plead the
claim with the requisite particularity. (Corp. Mov. Br. at
15).
7

product broke once and that someone had complained about it on the interne
t.” Rait v. Sears, Roebuck and
Co., No, 08-2461, 2009 WL 2488155, at *4 (D.N.J. Aug. 11, 2009) (Linares,
J.). Plaintiffs have not directed
this Court to any case law from the Third Circuit or elsewhere sugges
ting that a plaintiff can plead

knowledge of a defect based upon anonymous internet postings. (See PIs.’
Opp. Br. at 13-14). And, in the
district court cases relied upon by Plaintiff, courts found the knowl
edge element satisfied based upon a
variety of allegations in the pleadings, which happened to includ
e internet complaints.

See In re

Phillips/Màgnavox Television Litig., No. 09-cv-3072, 2010 WL 35227
87 (D.N.J. Sept. 1,2010) (identifying
“five reasons” why defendant knew of the defect, including
postings on consumer review websites);

Robinson v. Kia Motors America, Inc., 2015 WL 5334739 (D.N.J
. Sept. 11, 2015) (“In addition to the
allegations of knowledge described above, [p]laintiffs further assert that
[defendant] was aware of the defect
based upon (1) online consumer complaints about the alleged problem, and
(2) a technical service bulletin
issued by [d]efendants.”).
Plaintiffs here contend that even if the Court rejects the internet compl
aints as a basis for pleading
knowledge, there are “additional” allegations sufficient to plead Defend
ants’ knowledge. However, these
allegations of knowledge based upon “pre-release testing and
[the associated] testing data,” “testing
conducted in response to consumer complaints,” and from “aggre
gate data” (PIs.’ Opp. Br. at 18) are the
same allegations presented in the Plaintiffs’ Amended Compl
aint, which have already been deemed
insufficient by this Court. (MTD Op. at 4). Accordingly, the Court
finds that Plaintiff has failed to correct
the pleading deficiencies identified by this Court in its first opinio
n on Defendants’ motion to dismiss, and
therefore dismisses Count I of Plaintiffs’ Second Amended Compl
aint with prejudice.

B. Civil Conspiracy to Commit Fraud
Funai Corp. seeks dismissal of Plaintiffs’ civil conspiracy claim
on the grounds that Plaintiffs fail
to sufficiently plead their claim of fraudulent concealment,
a prerequisite to a claim based on civil

8

conspiracy to commit fraud. (Corp. Mov. Br. at 24-26). This Court
3
previously declined to dismiss
Plaintiffs’ civil conspiracy claims in light of Plaintiffs’ opportunity
to amend their fraud-based claims.

Having amended their fraudulent concealment claim which Plaintiffs “under
lies their conspiracy claim,”
Plaintiffs state that the conspiracy claim is now sufficiently plead.
In New Jersey, civil conspiracy claims are derivative of the underlying
fraud claim. Banco
Popular North America v. Gandi, 184 N.J. 161, 177-78 (2005) (“[T]h
e gist of the claim is not the
unlawful agreement, but the underlying wrong which, absent the
conspiracy, would give a right of
action.”); see also Warren v. Fisher, Civ. 105343, 2011 WL 40737
53, at *3 (D.N.J. Sept. 12,
2011). Here, because the Court dismisses Plaintiffs’ claim of commo
n law fraudulent concealment
for the reasons stated in Part III.B. above, so too must the Court dismis
s Plaintiffs’ derivative claim
of civil conspiracy to commit fraud.
The Court now considers Funai Electric’s Motion to Dismis
s for lack of personal
jurisdiction.

IV.

FUNAJ ELECTRIC’S MOTION TO DISMISS
In addition to adopting Funai Corp.’s 12(b)(6) arguments,
Funai Electric reasserts its

jurisdictional arguments that this Court stayed pending Judge
Dickson’s determination as to
whether jurisdictional discovery was necessary. (Electric’s
Mov. Br. at 10-15; MTD Op. at 27
(administratively terminating Funai Electric’s motion as it
pertains to personal jurisdiction). In
response, Plaintiffs ask the Court to forego ruling on
Funai Electric’s personal jurisdiction
arguments and to instead permit the parties to engage in jurisdi
ctional discovery. (Pis.’

Opp. Br.

at 33-3 8). Alternatively, Plaintiffs argue that even withou
t the benefit ofjurisdictional discovery,

Alternatively, Funai Corp. argues that the intracorporate
conspiracy doctrine precludes this claim. (Corp. Mov. Br.
at 30). In light of this Court’s dismissal of the civil conspi
racy claim on other grounds, this Court need not address
the applicability of the intracorporate conspiracy doctrin
e.

9

they have sufficiently pled that this Court has personal jurisdiction over Funai Electri
c. (Id. at 3852).

Before determining whether jurisdictional discovery is appropriate, the Court
will first

consider whether Plaintiffs have adequately pled the jurisdictional require
ments.
A. Legal Standard

Once a defendant files a motion to dismiss for lack of personal jurisdiction
pursuant to
Federal Rule of Civil Procedure 1 2(b)(2), the “plaintiffmust prove by affidav
its or other competent
evidence that jurisdiction is proper.” Metca(fe v. Renaissance Marine, Inc.,
566 F.3d 324, 330 (3d
Cir, 2009) (internal citations omitted).

Where, as here, the district court does not hold an

evidentiary hearing, a plaintiff need only establish a “prima facie case of person
al jurisdiction and
the plaintiff is entitled to have its allegations taken as true and all factual
disputes drawn in its
favor.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004).
Additionally, “[i]f the
contents of the plaintiff’s complaint conflict with the defendant’s affidavits,
the district court must
construe all reasonable inferences that can be drawn from the papers
in the plaintiff’s favor.”
HqfJn v. Butler Specialties, Inc., 2011 WL 831933 at *2 (D.N.J. Mar.
3, 2011) (quoting 4 Wright

& Miller, Federal Practice and Procedure: Civil 3d 1067.6 (3d ed. 2002)).
The plaintiff, however,
retains “the burden of demonstrating that the defendants’ contac
ts with the forum state are
sufficient to give the court in personam jurisdiction.” Mesalic v. Fiberfl
oat Corp., 897 F.2d 696,
699 (3d Cir. 1990). “These contacts must be shown ‘with reason
able particularity.” Weliness
Pubi ‘g v. Barefoot, 128 Fed. App’x 266, 268 (3d Cir. 2005) (unpub
lished) (quoting Mellon Bank
v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)).

“A federal court sitting in New Jersey has jurisdiction over parties
to the extent provided
under New Jersey state law.” Miller Yacht Sales, Inc., 384
F.3d at 96 (3d Cir. 2004). “New
Jersey’s long-arm statute provides for jurisdiction coextensive with
the due process requirements
10

of the United States Constitution.” Id. (citing N.J. Ct. R. 4:4-4(c)).
A district court sitting in New
Jersey may therefore exercise personal jurisdiction over a non-resid
ent defendant if the defendant
has “certain minimum contacts with [New Jersey] such that the
maintenance of the suit does not
offend ‘traditional notions of fair play and substantial justice.”
Heniy Heide, Inc. v. WRH Prods.
Co., Inc., 766 F.2d 105, 108 (3d Cir. 1985) (quoting Int’l Shoe Co.
v. Washington, 326 U.S. 310,
316 (1945)).
“Minimum contacts can be analyzed in the context of genera
l jurisdiction or specific
jurisdiction.” Metcalfe, 566 F.3d at 334. “General jurisdicti
on results from, among other things,
‘systematic and continuous’ contact between a non-resid
ent defendant and the forum state.
Spuglio v. Cabaret Lounge, 344 F. App’x 724, 725 (3d
Cir. 2009) (unpublished) (quoting
International Shoe, 326 U.S. at 320. “Specific jurisdicti
on over a defendant exists when that

defendant has ‘purposefully directed his activities at residents
of the forum

and the litigation results

from alleged injuries that arise out of or relate to those activ
ities.” Miller Yacht Sales, 384 F.3d
at 96 (quoting Burger King Corp. v. Rudzewicz, 471 U.S.
462, 472 (1985)).
A. General Jurisdiction

“‘[G]eneral jurisdiction exists when a defendant has main

tained systematic and continuous

contacts with the forum state.’ This is a fact-specific inquiry
, and the ‘nonresident’s contacts to
the forum must be continuous and substantial’ to supp
ort the exercise of general jurisdiction.”
Arpaio v. Dupre, 527 F. App’x 108, 113 (3d Cir. 2013)
(internal citations omitted). In recent years,
the United States Supreme Court has offered guidance on
the level of “continuous and substantial”
contacts that might justify the exercise of general or “all
purpose” jurisdiction.
In Goodyear Dunlop Tires Operations v. Brown the Cou
rt addressed a situation in which
the foreign subsidiaries of an American corporation chall
enged a North Carolina court’s exercise
11

of personal jurisdiction over them. 131 S. Ct. 2846 (2011). A unanimous Court discussed the
parameters of general jurisdiction, writing that “[f]or an individual, the paradigm forum for the
exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent
place. one in which the corporation is fairly regarded as at home.” Id. at 2853-54. The Court
reiterated the principal that “[a] corporation’s ‘continuous activity of some sorts within a state’
‘is not enough to support the demand that the corporation be amenable to suits unrelated to that
activity.” [ci. at 2856 (quoting Int’l Shoe Co., 326 U.S. at 318).

The Court further noted that

neither regular purchases of goods from a state nor the sales of goods to a state were sufficient, in
themselves, to subject an entity to general jurisdiction on claims unrelated to the sales/purchases.
Id. at 2856-57 (citing Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408, 418 (1984)).
As the Defendant subsidiaries in Goodyear had only “attenuated” contacts with the state (i.e., their
products were sold into the state via intermediaries) and were “in no sense at home in North
4
Carolina,” the Court found that the subsidiaries were not subject to general jurisdiction in North
Carolina’s courts. Id. at 2857.
The Supreme Court confirmed the narrow applicability of the general jurisdiction doctrine
in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). In Daimler, the Court rejected a formulation
of
the doctrine that would “approve the exercise of general jurisdiction in every State in which
a
corporation ‘engages in a substantial, continuous, and systematic course of busine
ss,”
characterizing that broad definition as “unacceptably grasping.” Id. at 761 (internal
citation
omitted),

The Court observed that “the inquiry under Goodyear is not whether a foreign

corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic,’
it is

Goodyear Court also specified that while the “[f]low of a manufacturer’s products into
a forum... may bolster
an affiliation germane to specific jurisdiction
ties serving to bolster the exercise of specific jurisdiction do not
warrant a determination that, based on those ties, the forum has general jurisdiction over
a defendant.” Id. at 2855
(emphases in original).
...

12

whether that corporation’s ‘affiliations with the State are so ‘continuous and
systematic’ as to
render it essentially at home in the forum State.” Id. at 761 (quoting Goody
ear, 131 S. Ct. at
2851). The Court also clarified that “the general jurisdiction inquiry does not ‘focus
solely on the
magnitude of the defendant’s in-state contacts.’ General jurisdiction instead
calls for an appraisal
of a corporation’s activities in their entirety, nationwide and worldwide. A
corporation that
operates in many places can scarcely be deemed at home in all of them. Otherw
ise ‘at home’
would be synonymous with ‘doing business’ tests framed before specific jurisdi
ction evolved in
the United States,” Id. at 762, n. 20. The Court ultimately found that there was
“no basis to subject
Daimler to general jurisdiction in California, for Daimler’s slim contacts with
the State hardly
render it at home there.” Id. at 760, 76 1-62.
B. Specific Jurisdiction
“Specific jurisdiction is established when a non-resident defendant has
‘purposefully
directed’ his activities at a resident of the forum and the injury arises from
or is related to those
activities.” Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001)
(quoting Burger King,
471 U.S. at 472). In other words, specific jurisdiction exists where the “cause
of action arises out
of [t]he defendant’s forum-related activities, such that the defendant should reason
ably anticipate
being haled into court in that forum.” Abel v. Kirbaran, 267 F. App’x 106,
108 (3d Cir. 2008)
(internal citations and quotations omitted).
Three elements must be met to establish specific jurisdiction. HS Real Co.,
LLC et al. v.
SIzer, 526 F. App’x 203, 206 (3d Cir. 2013). First, the defendant must have
purposefully availed
itself of the privilege of conducting activities within the forum. Id.
Second, “plaintiffs’ claims
must arise out of or relate to at least one of the contacts with the forum.”
Id. (internal citations and
quotations omitted). Third, the exercise of jurisdiction must comport with
traditional notions of
13

fair play and substantial justice. O’Connor

i’.

Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 317 (3d

Cir. 2007).
Because the existence of specific jurisdiction depends on a link between the defend
ant’s
activity and the resulting harm, a specific jurisdiction analysis is necessarily
claim specific.
Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (“Such a determination
is claim specific
because a conclusion that the District Court has personal jurisdiction over one
of the defendants
as to a particular claim asserted by [plaintiffj does not necessarily mean that it
has personal
jurisdiction over that same defendant as to [plaintiff]’s other claims.”).
C. Discussion

Funai Electric argues that the Court lacks general and specific jurisdiction
over it because
Funai Electric lacks sufficient minimum contacts to satisf’ the requirements of
due process. With
respect to general jurisdiction, Funai Electric contends that the Supreme Court’
s recent decision
in Daimler AG v. Bauman compels a finding that the Court lacks genera
l jurisdiction over
Plaintiffs’ claims relating to the United States subsidiary. (Electric’s Mov.
Br. at 1-2, 12-15).
Specifically, Funai Electric notes that the Supreme Court in Bauman “held
that mere ownership
by a foreign corporate parent of a subsidiary in the jurisdiction, without more,
does not confer
general jurisdiction over the foreign parent.” (Id. at 13).
As for specific jurisdiction, Funai Electric states that “[n]one of Plaintiffs’ purpor

ted causes

of action derive from contacts of Funai Electric with New Jersey.” (Id. at
15). Indeed, Funai
Electric points out that Plaintiffs’ claims, brought by non-New Jersey
residents, are based on
televisions purchased outside the State ofNew Jersey and relate to an alleged

statement of warranty

contained in the owners’ manual of those televisions published by Funai
Corp.
Moreover, Defendant notes that “[njeither Plaintiff.

14

.

.

(Id. at 16).

viewed any representation about the

televisions in New Jersey.” (Id. at 18). In sum, Defendant mainta
ins that “there is no evidence
suggesting that Funai Electric’s minimal contacts with New Jersey
have any relation to Plaintiffs
claims.” (Id.).
In opposition, Plaintiffs contend that this Court may approp
riately exercise general
jurisdiction over Funai Electric. Plaintiffs distinguish Bauman,
noting that unlike in Bauman
where the Supreme Court found no general jurisdiction over the parent
company where the sole
basis for that jurisdiction related to the actions of its subsidiary, here,
it is the parent corporation’s
activity, rather than the activity of its subsidiary, which is the
basis for this Court’s general
jurisdiction. (Pis.’ Opp. Br. at 42-43). Specifically, Plaintiff conten
ds that this Court has general
jurisdiction over Funai Electric because they “funnel[] each and every
one of [their] televisions
through Funai Corp., and established its subsidiary in New Jersey
for the sole purpose of doing so.
(Pis.’

Opp. Br. at 40).

Plaintiffs also cite to the twenty-five year relationship between
the entities,

and the fact that Funai Electric has three employees in New Jersey
and that the two companies
share at least one corporate officer. (Id. at 41). Moreover, Plainti
ff points to the fact, as alleged
in the Second Amended Complaint, that Funai Electric “routinely
utilizes licenses and trademarks
to sell its products in New Jersey through this state.” (Id.). All
of these allegations, according to
Plaintiff, demonstrate that Funai Electric’s contacts with
New Jersey are so continuous and
systematic such that it is “at home” in the State. (Id. at 43).
Plaintiffs also dispute Funai Electric’s position that this Court
lacks specific jurisdiction
over it, (Id. at 44-51). Plaintiffs state that Defendant has
only seriously disputed the second and
fourth prongs of the specific jurisdiction analysis—namely,
whether Funai Electric “purposefully
directed” its activities in New Jersey and whether Plaintiffs’
claims “arise out of’ its activities in

15

this jurisdiction. (Id. at 45). As to whether Funai Electric “purposefully directe
d” its activities in
New Jersey, Plaintiffs point to the Second Amended Complaint’s allegations
that Funai Electric:
(i) maintained a wholly owned subsidiary in the forum for almost 25 years,
(ii) funnels all
of its United States television marketing and distribution efforts throug
h this forum, (iii)
contributes to developing marketing materials and strategies in this forum,
and (iv) directs
the marketing of its products towards consumers in this forum.
(Id. at 45). Plaintiff also asks the Court to infer, based on the Defendants’
relationships with one
another, and based upon the fact that the Declaration of Seiji Ishizu, the Genera
l Manager of Funai
Electric, does not state otherwise, that Funai Electric attended meetings
and communicated with
Funai Corp. in New Jersey. (Id. at 46). Plaintiff further alleges that the fourth
prong of the specific
jurisdiction analysis is met here where their “claims inarguably ‘arise from’
and ‘relate to’ Funai
Electric’s contacts with New Jersey inasmuch as Funai Electric market
ed and distributed every
single television it sold in North America through its contacts with New Jersey
and Plaintiffs were
injured as a result.” (Id. at 47).
I.

This Court lacks General Jurisdiction over Funai Electric

First, the Court finds that Plaintiffs have failed to establish general jurisdi
ction over Funai
Electric. The inquiry for general jurisdiction is “not whether a foreign
corporation’s in-forum
contacts can be said to be in some sense ‘continuous and system
atic,’ it is whether that
corporation’s ‘affiliations with the State are so ‘continuous and
systematic’ as to render it
essentially at home in the forum State.” Bauman, 134 S. Ct. at 761
(quoting Goodyear, 131 S.
Ct. at 2851).

Indeed, as the Supreme Court explained in Bauman, absent
exceptional

circumstances not present in this case, general jurisdiction over a parent
corporation will not stand
even where the corporation “engages in a substantial, continu
ous, and systematic course of
business” in that state. Id. at 760, 761 n. 19. To that end, the paradig
matic, although not exclusive,

16

forums in which a corporate defendant can be said to be “at home” are “the
place of incorporation
and principle place of business.” Bauman, 134 S. Ct. at 760.
By Plaintiffs’ own account, Funai Electric is a Japanese company
with its headquarters in
Japan. (SAC

¶

4). Thus, Plaintiffs cannot show general jurisdiction under the
paradigmatic

examples noted in Bauman. Therefore, in order to show general jurisdiction,
Plaintiffs must show
that Funai Electric’s “affiliations with the state are so continuous and
systematic as to render it
essential at home” in New Jersey. Goodyear, 131 S. Ct. at 2851. Plainti
ffs have not made this
showing. In support of their general jurisdiction argument, Plaintiffs
chiefly rely upon the fact
that Funai Electric allegedly funnels its televisions through the State
of New Jersey. (Pls.’ Opp.
Br. at 40). As the Supreme Court has made clear, although “[fjlow of a
manufacturer’s products
into a forum.

.

may bolster an affiliation germane to specflc jurisdiction.

.

.

ties serving to bolster

the exercise of specific jurisdiction do not warrant a determination that,
based on those ties, the
forum has general jurisdiction over a defendant.” Goodyear, 131
S. Ct. at 2855 (emphases in
original). Similarly, the Court is not convinced that the presence ofthree
Funai

Electric employees

in New Jersey and the fact that the companies share a corporate officer
renders Funai Electric “at
home” in this State. According to Funai Electric’s website, as of
March of 2015, not long after
the Second Amended Complaint was filed, the company had
861 employees.
5

If a large

corporation could be haled to court in every jurisdiction in which
a handful of its employees

work,

the long line of cases developing the general jurisdiction doctrine
as applied to corporations would
be rendered meaningless. Accordingly, because Funai Electric cannot
be said to be at home

in this

jurisdiction, this Court cannot constitutionally assert general
personal jurisdiction over it.
ii.

This Court Also Lacks Specific Jurisdiction Over Funai
Electric

Funai, About Funai: Company Profile, htt

(last visited Dec. 11,2012).
17

Next, the Court finds that Plaintiffs have failed to establish specific jurisdiction as to Funai
Electric. To assert specific jurisdiction over a defendant, a court must make three
affirmative
findings.

First, “the defendant must have ‘purposefully avail[ed] itself of the privilege
of

conducting activities within the forum state.” Hanson v. Denekia, 357 U.S.
235, 253 (1958)
(internal citations omitted). Secondly, the plaintiff must show that the litigation ‘arises
out of or
relate[s] to’ those contacts.” O’Connor v. Sandy Lane Hotel, 496 F.3d 312, 317 (3d
Cir. 2007).
Lastly, if these first two requirements are met, specific jurisdiction must neverth
eless “comport
with traditional notions of fair play and substantial justice.” 0 ‘Connor v. Sandy
Lane Hotel Co.,
Ltd., 496 F,3d 312, 317 (3d Cir. 2007).

Here, the parties most seriously dispute whether the instant litigation can be said to “arise
out of or relate to” Funai Electric’s contacts with New Jersey. The Suprem
e Court has not
identified the “scope of this requirement.”

Sandy Lane Hotel, 496 F.3d at 318; see also

Helicopteros, 466 U.S. at 415 n. 10 (“We do not address

...

whether the terms ‘arising out of and

‘related to’ describe different connections.... Nor do we reach the question whethe
r, if the two
types of relationship differ, a forum’s exercise of personal jurisdiction in a situatio
n where the
cause of action ‘relates to,’ but does not ‘arise out of,’ the defendant’s contacts
with the forum
should be analyzed as an assertion of specific jurisdiction.”). Accordingly,
circuit and district
courts have attempted to circumscribe the type of claims that can be said to “arise
out of or relate
to” a defendant’s contacts with the forum.
In 0 ‘C’onnor v. Sandy Lane Hotel C’o., Ltd., the Third Circuit recogir
ized the lack of
consistency in which the Circuits and district courts have applied the “arise
out of or relate to”
requirement, and explained the three most common approaches. 496 F.3d
312, 318 (3d Cir. 2007).
First, the Court discussed the “proximate cause” standard, in which “the defend
ant’s contacts must

18

be the “legal cause” of the plaintiffs injury.” Id. at 319 (citing to First
Circuit case law). The
Court also discussed the lesser restrictive standard of the “but-for”
causation test. Id. at 319.
Courts that apply this test ask whether the claims would have arisen
without defendant’s contacts.
Id. Finally, the Circuit considered what it referred to as the “subst
antial connection” or “sliding

scale” approach to specific jurisdiction. hi at 3 12. This approach
turns on “whether the tie
between the defendant’s contacts and the plaintiff’s claim is close enough
to make jurisdiction fair
and reasonable.” Id.
After considering each of these approaches, the Third Circuit decline
d to adopt any of the
three; however, it expressly rejected the third, “sliding scale” test. Id. at
321. A serious weakness
with the “sliding scale approach is that it results in a breakdown of
the distinction between the

genera’ and specific jurisdiction analyses” such that the distinctions
“merge, and the result is a
freewheeling totality-of-the-circumstances test.” Id. at 320. That
is so because “[t]he degree of
relatedness required in a given case is inversely proportional
to the overall intensity of the
de[èndant’s forum contacts.” Id, (internal quotations and citations
omitted). The Court noted that
the two varieties of jurisdiction are distinct, and that Third Circui
t case law “recognize[sj the
importance of separate analysis.” Id. at 321.
Plaintiffs allege that their claims “arise from’ and ‘relate to’ Funai
Electric’s contacts with
New Jersey inasmuch as Funai Electric marketed and distributed
every single television it sold in
North America through its contacts with New Jersey and Plainti
ffs were injured as a result.” (Pis.’
Opp. Br. at 47). Had the Third Circuit adopted a strict “but-fo
r” test of relatedness, then this
connection would suffice because absent Funai Electric alleged
ly funneling defective televisions
into New Jersey, Plaintiffs across the United States would
presumably not have been injured.
However, the Third Circuit warned against this test as the “sole
measure of relatedness” where it

19

“literally embraces every event that hindsight can logically identify in the causative chain.” Sandy
Lane, 496 F.3d at 322 (internal quotations omitted).
In fact, in light of the weakness of the “but-for” test, the Court directed district courts
to

pay respect to the reciprocal benefits and obligations of a defendant’s contacts with the
forum
state, providing the following guidance:
[Sjpecific jurisdiction requires a closer and more direct causal connection than that
provided by the but-for test. As we stated in Miller Yacht, there is no “specific
rule”
susceptible to mechanical application in every case. But in the course of this necess
arily
fact-intensive inquiry, the analysis should hew closely to the reciprocity principle upon
which specific jurisdiction rests. With each purposeful contact by an out-of-state residen
t,
the forum state’s laws will extend certain benefits and impose certain obligations.
Specific
jurisdiction is the cost of enjoying the benefits. The relatedness requirement’s functio
n is
to maintain balance in this reciprocal exchange. In order to do so, it must keep
the
jurisdictional exposure that results from a contact closely tailored to that contact’s
accompanying substantive obligations. The causal connection can be somew
hat looser
than the tort concept ofproximate causation, but it must nonetheless be intimate enough
to
keep the quid pro quo proportional and personaljurisdiction reasonablv foreseeable.
Id. at 323 (internal citations and quotations omitted) (emphasis added).

In referencing the “reciprocity principles upon which specific jurisdiction rests,” the
Third
Circuit cited to the Supreme Court’s discussion in Burger King Corp. v. Rudze
wicz. Id. at 323
(citing Burger King, 471 U.S. at 475-476). In that case, the High Court identif
ied two situations
where a defendant can be said to have “manifestly availed himself of the privile
ge of conducting
business” in a jurisdiction such that “his activities are shielded by ‘the benefits
and protections’ of
the forum’s laws [and] it is presumptively not unreasonable to require him to submit
to the burdens
of litigation in that forum as well.” Burger King, 471 U.S. at 475-476. The
first condition occurs
“where the defendant ‘deliberately’ has engaged in significant activities within
a State.” Id. This
condition sounds in general jurisdiction, which, as discussed above, is nonexi
stent in this case.
Alternatively, the reciprocal principle may be implicated where the
defendant “has created
‘continuing obligations’ between himself and residents oftheforum.” Id. at 476
(emphasis added).
20

Thus, the reciprocal benefits and obligations of conducting business in a state

is typically discussed

in the context of a give-and-take between the defendant and the residents
of the State in which the
defendant has directed his contacts. Burger King, 471 U.S. at 476 (“So
long as a commercial
actor’s efforts are ‘purposefully directed’ toward residents ofanother State,
we have consistently
rejected the notion that an absence of physical contacts can defeat jurisdi
ction there.”) (emphasis
added).
In this case, although this action was filed in New Jersey, Plaintiffs here
are not New Jersey
residents. (SAC

¶ 1-2). They did not purchase their televisions in New Jersey, nor is there any

allegation that they received any information about their televisions from
the State of New Jersey,
or for that matter, that they have ever visited this District. (SAC 42-51)
. Thus, the Court finds
¶J
the connection between Funai Electric’s allegedly manufacturing televis
ions for distribution to its
New Jersey subsidiary and the injury sustained by Arizona and Florida
residents using their
televisions across the Country is not “intimate enough to keep the quid
pro quo proportional.”
Sandy Lane. 496 F.3d at 323.

Furthermore, the Court agrees with Funai Electric that a finding of
specific jurisdiction
based upon the tenuous connection asserted by Plaintiffs “would
effectively obliterate the
distinction between general and specific jurisdiction, making Funai Electri
c susceptible to person

al

jurisdiction in New Jersey no matter how tangential Plaintiffs’
causes of action are to the
relationship between Funai electric and its subsidiary.” (Electric Reply
Br. at 6). Such a conflation
of general and specific jurisdiction would run directly against the
Third Circuit’s rejection of the
“sliding scale” approach to specific jurisdiction and insiste
nce that the two analyses be
contemplated separately. Sandy Lane, 496 F.3d at 321 (“Thes
e categories constitute ‘two distinct
theories’ and our cases recognize the importance of separate analys
is.”).

21

For these reasons, the Court finds that Plaintiffs have not sufficiently
plead specific
jurisdiction where their claims cannot be said to “arise out of or relate
to” Funai Electric’s
connections

to New Jersey.

D, Jurisdictional Discovery is Neither Necessary Nor Appropriate

The Third Circuit has stated that unless a plaintiffs claim of personal
jurisdiction is
“clearly frivolous,” courts “are to assist the plaintiff by allowing jurisdictional
discovery prior to
granting a motion to dismiss on lack of personal jurisdiction grounds. Toys
“R” Us, Inc. v. Step
Two. LA., 3 18 F.3d 446, 456 (3d Cir. 2003). “If a plaintiff presents factual
allegations that suggest
‘with reasonable particularity’ the possible existence of the requisite ‘contacts
between [the party)
and the forum state,” the plaintiffs right to jurisdictional discovery should
be sustained. Id.
Here, Plaintiffs request jurisdictional discovery to obtain information
about Funai
Electric’s:

(i) corporate structure, (ii) distribution of the TVs to Funai Corp.
in New Jersey,
(iii) purportedly ‘indirect’ sales to consumers in and through New
Jersey, (iv)
communications to its employees located in New Jersey and those
employed by
Funai Corp. about the design, manufacturing, distributing, marketing,
and sales of
the TVs, and (v) financial records—including the amount of revenue genera
ted—
related to all transactions from which Funai Electric benefitted and/or
that occurred
in or were distributed through this state.
(Pls’. Opp. Br. at 37).
in light of the above discussion, however, this Court finds that even
if Plaintiffs were privy
to discovery on these limited items, Plaintiffs would nevertheless fail
to establish either general or
specific jurisdiction.

The requested categories of discovery seek information about
Funai

Electric’s contacts with New Jersey, and therefore, bear only on
the general jurisdiction analysis
under Bauman. If the Court were to permit discovery on these issues,
the most Plaintiff would be
22

For these reasons, the Court finds that Plaintiffs have not sufficiently
pled specific
jurisdiction where their claims cannot be said to arise out of or relate
to” Funai Electric’s
connections to New Jersey.

D. Jurisdictional Discovery is Neither Necessary Nor Appropri
ate

The Third Circuit has stated that unless a plaintiff’s claim of
personal jurisdiction is
“clearly frivolous,” courts “are to assist the plaintiff by allowing
jurisdictional discovery prior to
granting a motion to dismiss on lack of personal jurisdiction ground
s. Toys “R” Us, Inc. v. Step
Two, LA., 318 F.3d 446, 456 (3d Cir. 2003). “If a plaintiff presen
ts factual allegations that suggest
‘with reasonable particularity’ the possible existence of the requisite ‘contac
ts between [the party]
and the forum state,” the plaintiff’s right to jurisdictional discovery
should be sustained. Id.
Here, Plaintiffs request jurisdictional discovery to obtain
information about Funai
Electric’s:

(i) corporate structure, (ii) distribution of the TVs to Funai
Corp. in New Jersey,
(iii) purportedly ‘indirect’ sales to consumers in and through
New Jersey, (iv)
communications to its employees located in New Jersey and
those employed by
Funai Corp. about the design, manufacturing, distributing, market
ing, and sales of
the TVs, and (v) financial records—including the amount of
revenue generated—
related to all transactions from which Funai Electric benefitted
andlor that occurred
in or were distributed through this state.
(Pis’. Opp. Br, at 37).
In light of the above discussion, however, this Court finds that
even if Plaintiffs were privy
to discovery on these limited items, Plaintiffs would nevertheless
fail to establish either general or
specific jurisdiction.

The requested categories of discovery seek information
about Funai

Electric’s contacts with New Jersey, and therefore, bear only
on the general jurisdiction analysis
under Bauman. If the Court were to permit discovery on these
issues, the most Plaintiff would be
22

able to show is that Funai Electric “engages in a substantial, continuous, and system
atic course of
business” in New Jersey; however, that showing would still be insufficient for this Court
to have
general personal jurisdiction over Funai Electric. See Bauman, 134 S. Ct. at 760-76
1 (“Plaintiffs
would have us look beyond the exemplar bases Goodyear identified, and approve the
exercise of
general jurisdiction in every State in which a corporation ‘engages in a substantial,
continuous,

and systematic course of business.

That formulation, we hold, is unacceptably grasping. “)

(emphasis added).
Nor would discovery of Funai Electric’s business relationships with Funai Corp. in
New
Jersey have any meaningful bearing on the specific jurisdiction analysis. While disclos
ure of this
information may provide insight into whether Funai Electric purposefully availed itself
of the
benefit of doing business in New Jersey, it would not change this speculative and
tenuous
relationship between the claims, the parties, and Funai Electric’s contacts with
New Jersey.
Accordingly, the Court will deny Plaintiffs’ request for jurisdictional discovery where
Plaintiffs
have not “present[edj factual allegations that suggest ‘with reasonable particularity’
the possible
existence of the requisite ‘contacts between [the party) and the forum state.”

V.

CONCLUSION

For the reasons stated above, the Court grants Defendant Funai Corp.’s Motion to Dismiss
Counts
I and III of Plaintiffs’ Second Amended Complaint, and grants Defendant Funai Electric’s
Motion to
Dismiss all claims against it for lack of personal jurisdiction. An appropriate Order
accompanies this
Opinion.

DATED December

‘,

2015

23

JOSE L. LINARES
UNITED STATES DISTRICT JUDGE

24