Case Name:   Chris Pena v. Kaman Corporation, et al.

Case No.:       1-14-CV-265515

 

Currently before the Court is defendant Kaman Corporation’s (“Kaman Corp.”) motion to quash the service of summons and the first amended complaint of plaintiff Chris Pena (“Pena”) on the ground that the Court lacks both specific and general personal jurisdiction over Kaman Corp.

 

Specific Jurisdiction

 

            Kaman Corp. contends that it has not purposefully established any contacts with California and that any incidental contacts with California are not related to Pena’s causes of action. In opposition, Pena argues that Kaman Corp. has purposely established contacts with California by signing an employment contract with him and by actively utilizing internet resources to solicit California residents to purchase the products and services of its subsidiary, Kaman Industrial Technologies (“KIT”).

 

With regard to the employment agreement, Pena fails to demonstrate by a preponderance of the evidence that he in fact entered into a contract with Kaman Corp. First, Kaman Corp. provides the declarations of its general counsel, Jason R. Buckley, and KIT’s director of human resources, Ruben Montoya, who state that Pena was employed by defendant Minarik Corporation (“Minarik”), a subsidiary of KIT, not by Kaman Corp. (See Buckley Decl., ¶ 11; Montoya Decl., ¶ 7.) In opposition, the only evidence submitted by Pena regarding his employment with Kaman Corp. is his employment agreement executed on October 5, 2014. In the agreement, the contracting party is referred to by the term “Kaman” which is subsequently defined as “Kaman or an affiliated company.” (See Pena Decl., Ex. 1.) As worded, it is equally likely that the term “Kaman” could refer to Kaman Corp. or to “an affiliated company” such as Minarik or KIT. Therefore, as it is equally likely that the employment agreement was entered into by an affiliated company, Pena cannot show by a preponderance of evidence that he entered into a contract with Kaman Corp.

 

Even if the evidence did indicate that Pena entered into an employment agreement with Kaman Corp., Pena submits no evidence concerning the prior negotiations, contemplated future consequences, the parties’ course of dealings, and the contract’s choice-of-law provision, which might establish a substantial connection between the contract at issue and California. (Goehring v. Superior Court (1998) 62 Cal.App.4th 894, 907; see also Stone v. Texas (1999) 76 Cal.App.4th 1043, 1049 [“Due process requires a ‘substantial connection’ between the contract at issue and the forum state. [Citation].”].) Accordingly, the subject employment agreement does not establish that Kaman Corp. purposefully availed itself of the privilege of conducting activities in California.

 

With regard to Kaman Corp.’s website, Pena argues that an interactive job portal, links to the sale of KIT products, contact information, and investor alerts are sufficient to subject Kaman Corp. to specific personal jurisdiction in California. This argument is without merit. To establish specific jurisdiction, there must be a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claims. (See Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 575.) Here, Pena’s action is premised on the denial of medical benefits, disability discrimination and harassment, and an assortment of Labor Code violations. There is no indication that any of these claims are substantially connected to Kaman Corp.’s job portal, links to the sale of KIT products, contact information or investor alerts. Accordingly, Kaman Corp.’s website does not render it subject to specific personal jurisdiction in California.

 

Based on the foregoing, as Pena does not demonstrate Kaman Corp. purposefully availed itself of the privilege of conducting activities in California or that there is a substantial connection between Kaman Corp.’s forum activities and his claims, Kaman Corp. is not subject to specific personal jurisdiction in California.

 

Alter Ego Doctrine

 

Pena argues that there is a unity of interest and ownership between Kaman Corp. and KIT because Kaman Corp. shares the same management team as KIT, advertises KIT products on its website, profits from the sale of KIT goods, and imposes corporate policies and procedures including disability policies on the employees of KIT.

First, with regard to the management teams of Kaman Corp. and KIT, Pena indicates that both corporations share the same in-house legal counsel. In response, Kaman Corp. acknowledges that the officers and directors of the corporations do overlap. It states that only 1 of 3 members of KIT’s board of directors is a member of Kaman Corp’s board and 8 of 28 officers at KIT work for Kaman Corp. (Montoya Decl.,           ¶¶ 19-21.) While a factor in the alter ego analysis, the use of interlocking directors and officers does not, on its own, subject a parent corporation to the jurisdiction of the state where the subsidiary does business. (See Kramer Motors, Inc. v. British Leyland, Ltd. (9th Cir. 1980) 628 F.2d.1175, 1177 [interlocking directors insufficient to disregard separate corporate personalities if no control of the majority of the subsidiaries board of directors.) Here, Kaman Corp. submits evidence indicating that less than a majority of the KIT board is made up of members of the Kaman Corp.’s board and less than a third of the employees for KIT also work for Kaman Corp. Thus, the presence of overlapping directors and officers does not, in and of itself, warrant the piercing of the corporate veil.

 

Second, with regard to the advertisement of and profit from goods sold on Kaman Corp.’s website, Pena submits no evidence indicating that Kaman Corp. directly receives income from its subsidiary rather than through dividends. (See Tomaselli v. Transamerica (1994) 25 Cal.App.4th 1269, 1284, fn. 12 [receiving money in the form of dividends reinforces corporate separateness of parent and subsidiary].) Thus, this evidence does not indicate such a unity of interest and ownership that the separate corporate personalities of the two corporations do not exist.

 

Third, with regard to KIT’s use of general Kaman Corp. policies and disability policies, a foreign parent corporation is not subject to personal jurisdiction based solely on the independent activities of its wholly owned subsidiaries even where the parent exercises general executive responsibility for the operations of the subsidiary and reviews its major policy decisions. (See Sammons Enters. v. Superior Court (1988) 205 Cal.App.3d 1427, 1434; Tomaselli, supra, 25 Cal.App.4th at p. 1285 [sharing policy manuals with subsidiary insufficient to invoke alter ego doctrine].) Thus, KIT’s use of Kaman Corp.’s sexual harassment policy, general Code of Conduct policy and disability policies is insufficient to invoke the alter ego doctrine. Accordingly, Pena fails to demonstrate such a unity of interest and ownership that the separate corporate personalities of the Kaman Corp. and KIT do not in reality exist.

 

Finally, Pena contends that an inequitable result would occur because he might not receive all damages due to him. This argument lacks merit. “The alter ego doctrine does not guard every unsatisfied creditor of a corporation but instead affords protection where some conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form. Difficulty in enforcing a judgment or collecting a debt does not satisfy this standard.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539.) Here, Pena does not put forward any evidence indicating that KIT is undercapitalized or that any undercapitalization is due to the bad faith conduct of Kaman Corp. Accordingly, Pena fails to demonstrate that an inequitable result would occur if Kaman Corp. is not made a party to the action.

 

Agency Doctrine

                                   

Pena contends that Kaman Corp. is subject to personal jurisdiction because the acts of its agent, KIT, should be imputed to it. This argument is not persuasive. “For the purposes of acquiring jurisdiction over the foreign parent company based on agency, that company must … veer into management by exercise of control over the internal affairs of the subsidiary and the determination of how the company will be operated on a day-to-day basis.” (Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 798.) Here, Pena submits no evidence indicating that Kaman Corp. exercised such pervasive control over KIT. Links to KIT’s website on Kaman Corp.’s website, profiting from KIT sales, and the imposition of general corporate policies and procedures are not the kind of control of KIT’s operations necessary to invoke the agency doctrine. (See Sonora Diamond Corp., supra, 83 Cal.App.4th at p. 542 [“As a practical matter, the parent must be shown to have moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance of the subsidiary’s     day-to-day operations in carrying out that policy.”].) Accordingly, Pena fails to demonstrate that Kaman Corp. is subject to personal jurisdiction based on the doctrine of agency.

 

In sum, Pena does not demonstrate by a preponderance of evidence that either general or special jurisdiction over Kaman Corp. exists. Accordingly, the motion to quash service of summons is GRANTED.