Opinion
CV 13-03516 RSWL (JCx)
09-29-2015
AURORA CORPORATION OF AMERICA, a California corporation, Plaintiff, v. MICHLIN PROSPERITY CO., Ltd., a Taiwanese corporation; DOES 1-20, inclusive, Defendants.
ORDER re: DEFENDANT'S MOTION FOR ORDER DISMISSING ACTION AS AGAINST DEFENDANT, MICHILIN PROSPERITY CO., LTD., FOR LACK OF PERSONAL JURISDICTION [FRCP Rule 12(b)(2)] [39]
Before the Court is Defendant's Motion for Order Dismissing Action as Against Defendant Michilin Prosperity Co., Ltd., for Lack of Personal Jurisdiction [39], Plaintiff's Request for Judicial Notice [42], and Defendant's Request for Judicial Notice [44-1]. The Court, having considered all arguments presented, NOW FINDS AND RULES AS FOLLOWS:
The Court GRANTS Defendant's Motion to Dismiss pursuant to Federal Rule of Civil Procedure ("F.R.C.P.") 12(b)(2) [39]. The Court DENIES Plaintiff's Request for Judicial Notice [42]. The Court DENIES Defendant's Request for Judicial Notice [44-1]. The Court DENIES Plaintiff's request, in the alternative, to conduct jurisdictional discovery.
I. BACKGROUND
Plaintiff Aurora Corporation of America ("Plaintiff") is a California corporation authorized to do business with the State of California. Compl. ¶ 1. Defendant Michilin Prosperity Co., Ltd., ("Defendant") is a Taiwanese corporation with its principal place of business in Taipei, Taiwan. Compl. ¶2. At all relevant times, Defendant was the designer and manufacturer of the Aurora AS1000X 10CC Cross Cut Paper Shredder ("Shredder"). Compl. ¶ 3. Plaintiff is the distributor of the Shredder. Compl. ¶ 12. The Shredder was manufactured at Defendant's plant located in China. Compl. ¶ 13; See Compl., Ex. A, Affidavit of Frank Chang ("Chang Affidavit") ¶ 6. After the Shredder was manufactured, the Shredder was then shipped to Plaintiff in Torrance, California. Compl. ¶ 14; See Chang Aff. ¶ 6.
The present action arises out of a May 2008 incident involving a minor who was injured when she stuck her hand into the Shredder. Compl. ¶ 8. As a result of the incident, a lawsuit was filed with the U.S. District Court for the Northern District of Georgia. Id. See Askue v. Aurora Corporation, et al., Civil Action File No. 1:10-cv-0948-JEC ("the Georgia action"). Plaintiff and Defendant were named defendants in the Georgia action. Mot., 2:11-12. Defendant was dismissed from the Georgia action for lack of personal jurisdiction pursuant to F.R.C.P. 12(b)(2). Mot., 2:12-13.
The present action is an indemnity action filed by Plaintiff against Defendant for amounts paid by Plaintiff to defend and settle the Georgia action. Mot., 2:4-9. On July 17, 2015, Defendant filed the instant motion, requesting the Court to dismiss this action against Defendant for lack of personal jurisdiction. On July 28, 2015, Plaintiff filed its Request for Judicial Notice. On August 04, 2015, Defendant filed its Request for Judicial Notice.
II. DISCUSSION
A. Legal Standard
1. Judicial Notice
A court may take judicial notice of "a fact that is not subject to reasonable dispute because it: (1) is generally known within the court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).
2. Motion to Dismiss Pursuant to Fed R. Civ. P. 12(b)(2)
Pursuant to Federal Rule of Civil Procedure 12(b)(2), a district court cannot proceed against a defendant over which it lacks personal jurisdiction, unless that defendant has waived the requirement. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-03 (1982). In states where no applicable federal statute governs personal jurisdiction, that state's long-arm statute applies. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). The exercise of personal jurisdiction over a nonresident defendant requires the presence of two factors: (1) California's laws must provide a basis for exercising personal jurisdiction, and (2) the assertion of personal jurisdiction must comport with due process. Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1477 (9th Cir. 1986). California's long arm statute permits the exercise of personal jurisdiction to the fullest extent permitted by due process. See Cal. Civ. Proc. Code § 410.10; Panavision, 141 F.3d at 1320. "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004). Thus, only a due process analysis is required here.
Due process requires that a defendant have "certain minimum contacts with [the forum state] such that the 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 quotation marks omitted). The plaintiff bears the burden of proving that the defendant has sufficient minimum contacts with the forum state that warrant the court's exercise of personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003). Depending on the nature and scope of the defendant's contacts with the forum, jurisdiction may be general or specific to a cause of action. Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991).
When a defendant's contacts with the forum state are "substantial" or "continuous and systematic," general jurisdiction may be exercised over that defendant for any cause of action, even if it is unrelated to the defendant's activities within the forum state. Schwarzenegger, 374 F.3d at 801-02; Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1287 (9th Cir. 1977). In cases where a defendant's contacts are insufficient to support an exercise of general jurisdiction, more limited specific jurisdiction may be found where a cause of action arises out of or is related to the defendant's activities in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985); Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). "Specific jurisdiction may be exercised with a lesser showing of minimum contacts than is required for the exercise of general jurisdiction." ACORN v. Household Int'l, Inc., 211 F. Supp. 2d 1160, 1164 (C.D. Cal. 2002). The Ninth Circuit uses a three-part test to determine whether there is specific jurisdiction over a defendant: (1) the defendant must purposefully avail herself of the privilege of conducting activities in the forum by some affirmative act or conduct; (2) the plaintiff's claim must arise out of, or result from, the defendant's forum-related contacts; and (3) the extension of jurisdiction must be 'reasonable.'" Adv. Skin & Hair, Inc. v. Bancroft, 858 F. Supp. 2d 1084, 1089 (C.D. Cal. 2012) (citing Roth v. Garcia Marquez, 942 F.2d 617, 620-21 (9th Cir. 1991)).
As to the first prong, the Ninth Circuit generally uses a purposeful direction analysis when an action sounds in tort, whereas it uses a purposeful availment analysis when an action sounds in contract. Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672-73, n.2 (9th Cir. 2012).
"When a district court acts on a defendant's motion to dismiss under Rule 12(b)(2) without holding an evidentiary hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Ballard, 65 F.3d at 1498. In order to make a prima facie showing, the plaintiff must produce admissible evidence, which, if believed, would be sufficient to establish the Court's personal jurisdiction. Enriquez v. Interstate Grp., LLC, No. 11-CV-05155 YGR, 2012 WL 3800801, at *3 (N.D. Cal. Aug. 31, 2012). Accordingly, a district court is to take uncontroverted allegations in the complaint as true. AT&T Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996). However, "mere allegations of the complaint, when contradicted by affidavits, are [not] enough to confer personal jurisdiction of a nonresident defendant. In such a case, facts, not mere allegations, must be the touchstone." Taylor v. Portland Paramount Corp., 383 F.2d 634, 639 (9th Cir. 1967). See also Chem Lab Prods., Inc. v. Stepanek, 554 F.2d 371, 372 (9th Cir. 1977); Cummings v. W. Trial Lawyers Ass'n, 133 F. Supp. 2d 1144, 1154 (D. Ariz. 2001). Parties may go beyond the pleadings and support their positions with discovery materials, affidavits, or declarations. Am. Inst. of Intradermal Cosmetics, Inc. v. Soc'y of Permanent Cosmetic Prof's, No. CV 12-06887 GAF JCGX, 2013 WL 1685558, at *4 (C.D. Cal. Apr. 16, 2013). "[C]onflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists." AT&T, 94 F.3d at 588. "At the same time, however, the plaintiff must submit admissible evidence in support of its prima facie case." Id. B. Analysis
1. Plaintiff's Requests for Judicial Notice
a. Plaintiff's request that the Court judicially notice the Affidavit of Frank Chang
In Plaintiff's Request for Judicial Notice [42], Plaintiff requests that the Court take judicial notice of the Chang Affidavit, pursuant to Federal Rule of Evidence ("F.R.E.") 201(c)(2).
"There is a mistaken notion that taking judicial notice of court records ... means taking judicial notice of the existence of facts asserted in every document of a court file, including pleadings and affidavits. The concept of judicial notice requires that the matter which is the proper subject of judicial notice be a fact that is not reasonably subject to dispute. Facts in the judicial record that are subject to dispute, such as allegations in affidavits, declarations, and probation reports, are not the proper subjects of judicial notice even though they are in a court record." Rivera v. Hamlet, 2003 WL 22846114, at *5 (N.D. Cal. Nov. 25, 2003) (citing B. Jefferson, California Evidence Benchbook (3d ed.2003 update), § 47.10).
Accordingly, this Court takes judicial notice of the existence of the Chang Affidavit, but declines to take judicial notice of any facts or statements contained in the Chang Affidavit. Specifically, the Court cannot take judicial notice that any facts recited in the Chang Affidavit are true. The Court hereby DENIES Plaintiff's request that the Court take judicial notice of the Chang Affidavit, as to its substance.
b. Plaintiff's request that the Court judicially notice the Opinion and Order in Fellowes
In Plaintiff's Request for Judicial Notice [42], Plaintiff further requests that the Court take judicial notice of the Opinion and Order issued in Fellowes, Inc. v. Michlin Prosperity Co., 491 F. Supp. 2d 571 (E.D. Va., June 22, 2007).
Generally, a court may take judicial notice of the existence of a court file in another court, however, it cannot take judicial notice of factual findings made by that court. "As a general rule, a court may not take judicial notice of proceedings or records in another cause so as to supply, without formal introduction of evidence, facts essential to support a contention in a cause then before it." M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983); see also Wyatt v. Terhune, 315 F.3d at 1114 n. 5 ("Factual findings in one case ordinarily are not admissible for their truth in another case through judicial notice") (overruled on other grounds). Other circuits have followed this general rule, holding that a court cannot take judicial notice of factual findings made by another court. See United States v. Jones, 29 F. 3d 1549, 1553 (11th Cir. 1994) (holding that it is improper to take judicial notice of another court's findings establishing nature of salary in dispute); Liberty Mutual Ins. Co. v. Rotches Pork Packers, Inc., 969 F.2d 1384, 1388-89 (2d Cir. 1992) (holding that it is improper to take judicial notice of bankruptcy court's finding that sellers provided notice to preserve their trust rights and were cash sellers).
Accordingly, this Court will not take judicial notice of any of the factual findings in the Fellowes Opinion and Order. This Court cannot rely on the findings of the Virginia court to establish facts essential to support Plaintiff's contentions in the present action. The Court therefore DENIES Plaintiff's request to take judicial notice of the Opinion and Order in Fellowes.
2. Defendant's Request for Judicial Notice
Defendant requests that the Court take judicial notice of the opinion of the United States District Court, Northern District of Georgia, issued in the Georgia action, Askue v. Aurora Corporation of America, 2012 U.S. Dist. LEXIS 32626 (N.D. Ga. 2012). Def.'s Reply, Ex. A.
As previously discussed, "a court may not take judicial notice of proceedings or records in another cause so as to supply, without formal introduction of evidence, facts essential to support a contention in a cause then before it." M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983). As such, this Court DENIES Defendant's request to judicially notice the Georgia District Court's opinion in Askue.
3. Defendant's Motion to Dismiss for Lack of Personal Jurisdiction
a. General Personal Jurisdiction
Plaintiff asserts that it "could make an argument" that this Court has general jurisdiction over Defendant based on Defendant's "significant presence and activity in the United States and California," but that this argument is "unnecessary" because sufficient minimum contacts have been established. Opp'n. 4:14-19. Plaintiff does not make any further argument in support of this contention, and thus does not meet its burden of proving that this Court should exercise general personal jurisdiction over Defendant. As such, this Court finds that it does not have general personal jurisdiction over Defendant.
b. Specific Personal Jurisdiction
Specific jurisdiction is proper only when (1) the defendant has performed some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim arises out of, or results from, the defendant's forum-related activities; and (3) the exercise of jurisdiction is "reasonable." Terracom v. Valley Nat'l Bank, 49 F.3d 555, 560 (9th Cir. 1995) (citing Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir. 1990)).
Plaintiff bears the burden of satisfying the first two prongs of the test. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). If the plaintiff fails to satisfy either of these prongs, personal jurisdiction is not established in the forum state. Id. If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the defendant to "present a compelling case" that the exercise of jurisdiction would not be reasonable. Id. "[A] plaintiff must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant's motion to dismiss." Data Disc, Inc. v. Sys. Tech. Associates, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977).
Plaintiff relies on the shipment of the Shredder from China to California as the basis for its indemnity claims. See Compl. ¶¶ 16-24. Because Plaintiff's claims are based on indemnity, the Court finds that this action sounds primarily in contract. As such, the first prong is analyzed under the "purposeful availment" standard.
See Repwest Ins. Co. v. Praetorian Ins. Co., 890 F. Supp. 2d 1168, 1188 (D. Ariz 2012) ("In cases arising out of contractual relationships, including those involving related tort claims, the Ninth Circuit applies the 'purposeful availment' test").
i. Purposeful Availment
"To have purposefully availed itself of the privilege of doing business in the forum, a defendant must have 'performed some type of affirmative conduct which allows or promotes the transaction of business within the forum state.'" Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008). A purposeful availment analysis considers "whether the defendant's contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff." Amini Innovation Corp. v. JS Imports, Inc., 497 F.Supp.2d 1093 (C.D. Cal. 2007) (citing Sinatra v. National Enquirer, 854 F.2d 1191, 1195 (9th Cir. 1988)).
In the present case, Plaintiff has asserted claims for contractual indemnity, equitable indemnity, and indemnity through course of conduct. Plaintiff makes the following allegations to support a finding of specific jurisdiction over Defendant: Plaintiff alleges that Defendant
(a) shipped the subject Shredder from Taiwan to the Plaintiff in Torrance, California; (b) set the price of the shredders for sale in the United States; (c) contracted with major retailers in the United States for sale of its products; (d) sold the majority of its shredders in the United States; (e)Opp'n 3:4-20, 8:23-26.
advertised its shredders as receiving awards from various office equipment organizations in the United States; and (f) profited significantly from the sale of products to and throughout California.
a. Shipment of the Shredder
Plaintiff alleges that the Shredder was shipped by Defendant from Taiwan to California, and thereby Michilin established significant contact with "the United States and California." Id. at 3:1-6. Plaintiff bases this allegation on statements contained in paragraph five of the Chang Affidavit. Opp'n, 3:4-6. As discussed above, the Court will not judicially notice the substance of the Chang Affidavit, thereby declaring the allegations made within as true. Further, upon review of the Chang Affidavit, Plaintiff's claim that "the subject Shredder was shipped by Michilin from Taiwan to Aurora in Torr[a]nce, California" is not substantiated by the language of the cited paragraph. Id. (emphasis added) It appears from the language of the Affidavit that Plaintiff intended to reference paragraph six of the Chang Affidavit. Nonetheless, paragraph six does not support Plaintiff's contention that the Shredder was shipped by Defendant from Taiwan to California, such that the shipment was made at Defendant's direction or while it was within Defendant's control. Rather, paragraph six states that the "[S]hredder was then shipped to Aurora Corporation of America...", with no indication of who directed the shipment of the product. Chang Aff. ¶ 6. The Chang Affidavit simply states: "After the paper shredder was delivered to Aurora Corporation of America, Michilin had no further involvement with the distribution or sale of the product." Id.
Plaintiff also cites paragraph five of the Declaration of Frank Chang in Support of Defendant's Motion to Dismiss ("the Chang Declaration") to support its contention that Defendant shipped the Shredder to California. Opp'n, 3:4-6. Again, the referenced paragraph of the Chang Declaration does not substantiate Plaintiff's claim that Defendant directed the shipment of the Shredder from Taiwan to California. See Pl.'s Mot., Chang Decl. ¶ 5 [39-2]. Plaintiff does not offer any further evidence regarding this allegation, and therefore has not met its burden of proving that Defendant purposefully availed itself of doing business in California by shipping the subject Shredder to California. Again, it appears from the language of the Declaration that Plaintiff intended to reference paragraph six of the Chang Declaration. Still, paragraph six of the Chang Declaration does not support the contention that Defendant directed the shipment of the Shredder to California. Rather, paragraph six contradicts Plaintiff's allegation, stating, "The Michilin model AS1000X paper shredders were manufactured at Michilin's plant located in China. Pursuant to specific order and direct instructions from Aurora ... the AS1000x paper shredders were shipped 'Free on Board' (F.O.B.) Yan-Tain, China." Chang Decl. ¶ 6.
Defendant argues that the Shredder was shipped pursuant to Plaintiff's orders and instructions, and that ownership of the Shredder transferred to Aurora before departing China as the shredders were shipped "Free On Board" (F.O.B.) Yan-Tain, China. Mot. 9:15-21.
In an "F.O.B." contract, "[t]he seller's delivery is complete (and the risk of loss passes to the buyer) when the goods pass into the transporter's possession." FREE ON BOARD, Black's Law Dictionary (10th ed. 2014). The Ninth Circuit has yet to determine whether F.O.B. shipments are sufficient to establish minimum contacts in a state. The Fifth Circuit has held that an "F.O.B term does not prevent a court from exercising personal jurisdiction over a non-resident defendant where other factors, such as quantity and regularity of shipments, suggest that jurisdiction is proper." Luv N' care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 471-72 (5th Cir. 2006). Precedent regarding F.O.B. shipments and personal jurisdiction have required "other factors" to be present in order for the Court to find purposeful availment to establish personal jurisdiction.
The United States District Court for the District of Hawaii has held that "agreeing to delivery F.O.B. North Carolina does not negate purposeful availment of the laws of Hawaii." Rudolph v. Topsider Bldg. Sys., Inc., No. CIV 07-00225 SOM-BMK, 2007 WL 2156089, at *4 (D. Haw. July 24, 2007). In Rudolph, the Court found that other factors despite the F.O.B. shipment subjected the defendant to personal jurisdiction, including discussions concerning using the shipped products in Hawaii, six separate shipments to Hawaii, and a warranty and offer for trouble-shooting that indicated contemplation of future consequences. Id. at *5. The Court in Rudolph cited a case in Maine, where minimum contacts were found despite shipment F.O.B. Honeoye, New York due to extensive negotiations, a thirty-day warranty, start-up assistance, and significant shipment of goods into Maine. Id. at *4, see also Lucerne Farms v. Baling Technologies, Inc., 226 F.Supp.2d, 25 (D.Me.2002).
In Luv N' care, the court found the defendant derived substantial revenue from its shipments to the forum state through evidence of sales of thousands of units into the forum state, making up 4.5% of the defendant's total distribution. 438 F.3d 465 (5th Cir. 2006).
Here, Plaintiff has not put forth evidence of any "other factors" that would make this Court's exercise of personal jurisdiction over Defendant proper. Plaintiff has not offered any admissible evidence of extensive negotiations, warranties, multiple shipments, or the amount of sales or revenue arising from shipment(s) to California. Therefore, the Court finds that the subject shipment, F.O.B. Yan-Tain, China, is not joined by the requisite "other factors" to establish sufficient minimum contacts to enable this Court to exercise specific personal jurisdiction.
b. Setting the Price of the Shredder
Plaintiff alleges that Defendant purposefully availed itself of doing business in California by maintaining control over its products after they are shipped to the United States. Opp'n., 7:23-27. Plaintiff bases this allegation on statements made in the Fellowes Opinion. As discussed above, the Court will not take judicial notice of the substance of the Opinion, as it consists of factual findings reached in another court's proceeding. Even if the Court could consider the findings of the Fellowes Opinion, the Fellowes court's findings establish that Defendant maintained control of its products after they were shipped to the United States generally, which does not support a finding of purposeful availment in California specifically. Plaintiff provides no further evidence in support of this allegation. As such, the Court finds that Plaintiff's allegation that Defendant maintained control over its products after the reached the United States does not support a finding that Defendant purposefully availed itself of California's jurisdiction.
c. Contracting with U.S. Retailers
Plaintiff argues Defendant purposefully availed itself of California's jurisdiction because Defendant "contracts with and sells its products through Target, Wal-Mart, Big Lots and Office Depot, all of which maintain multiple locations within the United States, including California." Opp'n, 4:23-26. To prove this allegation, Plaintiff cites the same Fellowes Opinion as discussed above, which the Court should not take judicial notice of in order to establish its contents as true. Plaintiff does not provide any further evidence to support that Defendant contracts with multiple stores located in California. Therefore, the Court finds that Plaintiff's allegation is not supported by sufficient evidence to warrant a finding of purposeful availment.
d. Majority of Shredders Sold in U.S.
Plaintiff then argues Defendant purposefully availed itself of California's jurisdiction through additional evidence derived from the Fellowes Opinion, alleging that "about 85% of Michilin's shredders [were] available for sale in the United States in 2004." Opp'n, 8:1-3. As discussed above, the Court cannot judicially notice the contents of this Opinion. The Plaintiff does not offer any other evidence to support this assertion. Therefore, the Court should find that this allegation does not support a finding of purposeful availment.
e. Advertisement of U.S. Awards
Plaintiff asserts that Defendant's advertisement of awards received from United States based office equipment organizations on Defendant's website is evidence of purposeful availment in California. Opp'n, 3:16-18. Plaintiff admits that Defendant's use is a "public advertisement to the world" but that since the awards are from U.S. companies, the use functions as an example of Defendant doing business in and with the United States. Opp'n. 8:12-15. In J. McIntyre Machinery, Ltd., v. Nicastro, the defendant directed marketing and sales efforts at the United States. 131 S. Ct. 2780 (2011). Justice Kennedy stated that "the question concerns the authority of a New Jersey state court to exercise jurisdiction, so it is petitioner's purposeful contacts with New Jersey, not with the United States, that alone are relevant." Id. at 2790. Here, the question concerns California's authority to exercise jurisdiction, thus Defendant's contacts with the United States in general are not sufficient, as per the Supreme Court's holding in J. McIntyre, to establish purposeful availment of California's jurisdiction. As such, the Court finds that Defendant's advertisement of awards from U.S. companies for its product does not establish that Defendant purposefully availed itself of California's jurisdiction specifically.
f. Significant Profits from California
Plaintiff further alleges that Defendant's contacts with California include "significant profits from the sale of products to and throughout California." Opp'n, 3:19-20. Plaintiff does not present any evidence regarding Defendant's actual sales or profits arising from California. Plaintiff relies solely on the above-referenced allegation from the Fellowes Opinion that because "85% of Michilin's shredders [were] available for sale in the United States in 2004", this amounts to Defendant receiving substantial revenue from these sales. Id. at 8:1-7. Plaintiff then asserts that therefore Defendant "knew it was generating significant revenue based on products that would be sold to California users." Id. Again, the Court will not judicially notice the findings of the Fellowes court. Plaintiff provides no further admissible evidence as to the alleged "significant profits" Defendant acquires "from the sale of products to an throughout California." Plaintiff instead supports its contention with conclusory allegations. Without further evidence, the Court finds that Plaintiff has failed to establish that Defendant purposefully availed itself of California through alleged significant profits from California.
g. Entry of Products into Stream of Commerce
Plaintiff then asserts that Defendant was aware its products would reach California users because it sold a "large amount of products" to Plaintiff, a wholly-owned California distributor. Id. at 7:18-20. Defendant contends that their contact with Plaintiff in California, if any, was incidental: Defendant sold its products "in China to a California distributor who imported the products into California for distribution and sale in the United States." Reply 10:17-19. Plaintiff does not offer any admissible evidence as to its claim, but rather again simply cites the findings of the Fellowes court. Id. at 7:12-22. Still, evidence that Defendant engaged in transactions with a California distributor for United States retailers is insufficient to warrant the exercise of California's specific personal jurisdiction. The mere fact that Defendant opted to participate in a business relationship with Plaintiff knowing that Plaintiff had an office in California is insufficient to create minimum contacts. See Dynamic Software Servs. v. Cyberbest Tech., Inc., 2014 WL 3373924 at *9 (N.D. Cal. July 9, 2014) ("Mere knowledge that the plaintiff is based in the forum state is insufficient to establish purposeful availment.")
Plaintiff argues that the "large volume of sales of products that traveled to California end-users was not random or fortuitous" and therefore Defendant "was aware that a large amount of products it sold to [Plaintiff] ... would reach California users." Opp'n 7:12-20. Plaintiff relies on Bridgestone Corp. v. Superior Court, in which a California court exercised jurisdiction based on "a manufacturer's placement of goods in the stream of commerce with the expectation that they will be purchased or used by consumers in California [as] indicat[ing] an intention to serve the California market 'directly or indirectly.'" 99 Cal. App. 4th 767, 777 (Cal. Ct. App. 2002) (citing World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 297 (1980)). However, Plaintiff did not consider the court's whole statement. In the same sentence, the California Court of Appeal explained that this placement of goods in the stream of commerce "constitutes purposeful availment if the income earned by the manufacturer from sale or use of its product in California is substantial." Id.
Plaintiff has not submitted any evidence as to Defendant's income earned due to sales or use of the product, if any, in California. Because the evidence put forth by Plaintiff does not sufficiently prove substantial income from sale or use of the product in the state of California, the Court finds that Plaintiff has not met its burden of proving purposeful availment through the stream of commerce doctrine, as outlined in Bridgestone.
Defendant argues that the Bridgestone court relied on the "stream of commerce" doctrine of specific jurisdiction. Reply 8:14-21. Defendant asserts that the Court should apply the "stream of commerce plus" doctrine, in which the Supreme Court reasoned that mere foreseeability or awareness that a product may enter a forum state is insufficient without "additional conduct." Opp'n 8:27-28, 9:1-17. In the present case, Plaintiff has not provided sufficient evidence that Defendant has engaged in any direct contact with California. Further, Plaintiff has failed to provide evidence of additional conduct directed at California necessary to satisfy the "stream of commerce plus" doctrine enumerated in Asahi and J. McIntyre.
The "stream of commerce" doctrine provides that "the forum state does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." World-Wide Volkswagen Corp. v. Woodson, 444. U.S. 286, 297-298 (1980).
Since World-Wide Volkswagen, Courts have differed as to what evidence is sufficient to establish the "expectation" that a product will be purchased by consumers in the forum State. The United States Supreme Court has attempted to clarify the "stream of commerce" doctrine in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), and J. McIntyre Machinery, Ltd. v. Nicastro, 131 S.Ct. 2780 (2011), with both plurality opinions noting that "something more" than "mere foreseeability" is needed. However, the lack of a majority in both cases has continued to leave circuits split as to the boundaries of the "stream of commerce" doctrine. Justice O'Connor's plurality opinion in Asahi requires that the defendant engage in additional conduct other than mere awareness that a given product will reach the forum state. Justice Brennan's concurrence in Asahi focuses instead on foreseeability, in that "as long as a participant [in the stream of commerce] is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise." Asahi, 480 U.S. 102 at 117. In J. McIntyre, the Supreme Court attempted to clarify its earlier holding from Asahi. In Justice Kennedy's plurality opinion in J. McIntyre, the Court reinforced the requirement of additional conduct purposefully directed at the forum state and rejected Justice Brennan's concurrence in Asahi. Justice Breyer's concurrence in J. McIntyre, followed by several Circuits as the "narrowest grounds" from the holding, rejected the plurality's strict rule that limits jurisdiction "where a defendant does not 'inten[d] to submit to the power of sovereign' and cannot 'be said to have targeted the forum.'" J. McIntyre, 131 S. Ct. 2780, 2793. --------
In the present case, in accordance with the "stream of commerce plus" doctrine discussed in both the plurality opinions from Asahi and J. McIntyre, and Justice Breyer's concurrence in J. McIntyre, the Court finds that Plaintiff has not made a sufficient showing to establish that Defendant has purposefully availed itself of California's jurisdiction.
ii. Forum-Related Activities
Plaintiff argues that the damages at issue in the present action arose out of Defendant's contacts with the forum. Plaintiff asserts that this "lawsuit arose directly out of Michilin's contacts because all of Michilin's products, including the subject Shredder, were initially shipped to California, which were then distributed throughout the state and country." Opp'n 8:23-26.
Defendant argues in response that Plaintiff fails to establish that this action "[arose] out of or relates to...forum-related activities", as required by Bridgestone. Reply 10:27-11:2. Defendant posits that, even "assuming the 'contact' was Michilin's sale of the AS1000X paper shredders in China to Aurora, a California distributor, with the knowledge or expectation that the paper shredders would be sold in the United States ... there is no evidence that Aurora's indemnification claim arises out of or has a substantial connection with Michilin's 'contact' with California." Id. at 11:9-15. The Court finds accordingly. Since the alleged accident occurred in Georgia, see Askue v. Aurora Corp. Of America, 2012 WL 843939 at *4 (N.D.Ga. 2012), it does not follow that Plaintiff's indemnification claims are related to Defendant's alleged activities in California.
The Court finds that Plaintiff failed to put forth sufficient evidence that the indemnity action arose out of any of Defendant's alleged forum-related activities to warrant the Court's exercise of personal jurisdiction.
iii. Reasonableness of Court's Exercise of Personal Jurisdiction Over Defendant
"If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the defendant to 'present a compelling case' that the exercise of jurisdiction would not be reasonable." Adv. Skin & Hair, Inc. v. Bancroft, 858 F. Supp. 2d 1084, 1091 (C.D. Cal. 2012)(citing Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)). As discussed above, Plaintiff has not satisfied either prong one or prong two of the specific jurisdiction test, and thus the Defendant bears no burden of proving prong three. Further, Plaintiff applies the incorrect law in determining whether the exercise of jurisdiction over a defendant is reasonable. The Ninth Circuit has set forth seven factors to be considered in determining whether the exercise of jurisdiction over a nonresident defendant is reasonable: (1) the extent to which the defendant purposefully interjected itself into the affairs of the forum state; (2) the burden on the defendant; (3) conflicts of law between the forum and the defendant's home jurisdiction; (4) the forum's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the dispute; (6) the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum. Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).
Plaintiff improperly relies on Illinois case law indicating that "other jurisdictions" have "explicitly" recognized that an insurer doing business within a state has a "weighty interest" in litigating in that state, where an insurer has suffered serious losses due to the defendant's product injuring one of its insureds. Opp'n 9:11-18, Sentry Ins. Co. v. Bull HN Info. Sys., Inc., No. 97 C 4211, 1999 WL 51801, at *2 (N.D. Ill. Jan. 29, 1999). Plaintiff calls attention to Illinois' interest in "protecting the interest of insurers of businesses in Illinois, thereby encouraging business growth and rational risk management" as weighing in favor of asserting jurisdiction. Id.
Plaintiff asserts that because Defendant's alleged defective product harmed a minor child, Plaintiff paid compensatory damages when a lawsuit was filed by the child's parents. Opp'n 9:19-22. Plaintiff argues that Plaintiff and California both have a significant interest in "protecting the interests of its businesses from defective products that cause damages." Id. Plaintiff does not address any of Defendant's arguments in regards to reasonableness.
Defendant, in turn, references the test from World-Wide Volkswagen. Defendant asks the Court to consider: "(1) the burden on Michilin, (2) the interests of the forum state, (3) plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining convenient and effective relief, and (5) the shared interest of the various jurisdictions in furthering fundamental substantive social policies." Mot. 14:14-22; See World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 292 (1980).
The only instance of interjection into California is the arrival of the Shredder to Plaintiff in California. Compl. ¶14. Defendant contends that if it is compelled to litigate in California, it will incur a substantial burden by having to travel to California for court appearances and to produce witnesses and evidence for proceedings. Mot. 15:4-14. Defendant does not address any of the prongs of the test other than the burden on itself.
Applying the Ninth Circuit's test as set forth in Roth, the Court weighs each factor individually.
a. Purposeful Interjection
In weighing the factor of purposeful interjection, the extent of the defendant's purposeful interjection into the forum is considered in regards to "the smaller the element of purposeful interjection, the less is jurisdiction to be anticipated and the less reasonable its exercise." Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993). Defendant argues that its alleged wrongful conduct occurred in China, where its business and employees are located, and that Defendant has no physical sales force presence in the state of California. Reply, 13:2-6. The only interjection into California is a Defendant-manufactured product, to which Defendant "surrendered its custody, possession, and control in China." Mot. 15:1-3. As this element of purposeful interjection is relatively small, the exercise of jurisdiction over Defendant is less reasonable. Thus, the Court finds that this factor does not weigh in favor of reasonableness.
b. Burden on Defendant to Litigate in Forum
Defendant argues that the burden of litigating in California would be great because all of Defendant's documents, communication, and witnesses are located in China. Reply, 13:11-15. Defendant also argues that there is a large burden of travel due to the mandatory attendance requirements of this Court and Defendant has no employees, agents, or representatives in California. Mot., 15:4-10. In light of the above, the Court finds that this factor does not weigh in favor of reasonableness.
c. Conflict with Sovereignty
The third factor evaluates "the extent of any conflict with sovereignty" of the defendant's home country or state. Id. Defendant acknowledges that the Supreme Court "has recently emphasized the importance of international comity as an important factor," but fails to provide any evidence that keeping this case in California would affect "international comity." Mot. 14:20-22. Defendant has not provided any evidence of a conflict with any sovereignty and thus the Court finds that this factor weighs in favor of reasonableness.
d. California's Interest
The fourth factor "considers California's interest in adjudicating the controversy." Adv. Skin & Hair, 858 F. Supp. 2d at 1091. Plaintiff alleges that "defendants' defective product harmed a minor child" which caused Plaintiff, a California corporation, to pay compensatory damages in a lawsuit for the injury. Plaintiff argues that California has a "significant interest in protecting the interests of its businesses from defective products that cause damages." Opp'n. 9:19-22. Defendant argues that this is "not a personal injury-product liability action brought by a California consumer against a foreign manufacturer, but is rather a claim for reimbursement, brought by "a sophisticated commercial distributor located in California against a Taiwanese manufacturer." Reply 12:18-22. Because California maintains a strong interest in "redressing the injury of its citizen," the Court finds that this factor weighs in favor of reasonableness. Adv. Skin & Hair, 858 F. Supp. 2d at 1091.
e. Efficient Judicial Resolution
The fifth factor, focusing on the most efficient judicial resolution of the controversy, "primarily focuses on the location of the evidence and the witnesses." Id. at 1092. Defendant argues that all of the evidence relating to the subject product, as well as Defendant's witnesses, are located in China. Reply, 13:11-13. Plaintiff has not offered any evidence relating to this matter. Accordingly, the Court finds that this factor does not weigh in favor of reasonableness.
f. Plaintiff's Interest in Relief
The sixth factor is the importance of the forum to a plaintiff's interest in convenient and effective relief. Id. Nothing in the Parties' papers establishes that effective relief is not available to Plaintiff in China, Defendant's preferred choice of forum. Defendant argues that there is "no contractual obligation addressing the indemnification claim," and that Plaintiff "can and should pursue its indemnification claim against Michilin in China." Reply 13:15-18. The Court finds that this factor weighs slightly against a finding of reasonableness.
g. Alternative Forum
The final factor is the availability of an alternative forum. Plaintiff has not alleged that there are no alternative forums for its claims or that Plaintiff could not bring its claims in China. Again, Defendant has advised that Plaintiff should bring its indemnification claim against Defendant in China. As such, the Court finds that this factor does not weigh in favor of reasonableness.
Since the majority of these factors weigh against a finding of reasonableness, this Court finds that it would be unreasonable for it to exercise personal jurisdiction over the Defendant. Based on the foregoing reasons, the Court finds that it cannot exercise specific jurisdiction over Defendant. Accordingly, the Court GRANTS Defendant's Motion pursuant to Fed. R. Civ. P. 12(b)(2). This action shall be dismissed for lack of personal jurisdiction.
4. Plaintiff's Request, in the Alternative, for Jurisdictional Discovery
In its Opposition, Plaintiff requests that if the Court is inclined to grant Defendant's motion to dismiss, that Plaintiff be given an opportunity to conduct jurisdictional discovery, in order to further establish personal jurisdiction through minimum contacts. Opp'n 10:2-8. Plaintiff has not proffered any admissible evidence that Defendant has sufficient minimum contacts with California to warrant the exercise of specific personal jurisdiction over Defendant. Plaintiff's allegations stem largely from the findings in another court's proceeding and as such do not rebut Defendant's evidence as to minimum contacts.
Furthermore, Plaintiff's request for jurisdictional discovery is not narrowly tailored to flesh out certain instances of alleged minimum contacts, but rather generally requests that the Plaintiff be given the opportunity to further establish minimum contacts. Id. See Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1074, fn. 1 (8th Cir. 2004)(citing Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 402 (4th Cir.2003) ("When a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery.")); see also McLaughlin v. McPhail, 707 F.2d 800, 806 (4th Cir.1983) (holding that district court *403 did not abuse its discretion in denying jurisdictional discovery when, "[a]gainst the defendants' affidavits," plaintiff "offered nothing beyond his bare allegations that the defendants had had significant contacts with the [forum] state of Maryland" (internal quotation marks omitted)). Accordingly, this Court DENIES Plaintiff's request, in the alternative, to conduct jurisdictional discovery.
IT IS SO ORDERED. DATED: September 29, 2015
s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge