MOTION TO QUASH SERVICE OF SUMMONS AND COMPLAINT

Moving Party: Specially Appearing Defendant Waste Management, Inc.

Respondent: Plaintiff Irwindale Partners, L.P.

POS: OK (Hearing continued from 10/30/13 and 1/22/14)

In this action alleging a breach of a landfill lease agreement, Plaintiff alleges that Defendants’ operation of the landfill was not done in compliance with the lease, as well as applicable laws and regulations. The Complaint, filed on 5/24/13, asserts causes of action for:

1. Breach of Contract
2. Nuisance
3. Trespass
4. Waste
5. Fraud
6. Negligent Misrepresentation
7. Nuisance

On 10/15/13, this case was deemed related to case number KC066276, USA Waste of California, Inc. v. City of Irwindale.

The Case Management Conference is set for 3/25/14.

Specially Appearing Defendant Waste Management, Inc. (“Waste Management”) moves for an order quashing service of the summons and complaint upon it in this action. The motion is made on the grounds that the court lacks personal jurisdiction over it.

A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a motion to quash service of summons on the ground of lack of jurisdiction of the court over him, her or it. (CCP 418.10(a)(1).)

Although defendant is the moving party, the burden of proof is on the plaintiff: “[W]hen jurisdiction is challenged by a nonresident defendant, the burden of proof is upon the plaintiff to demonstrate that ‘minimum contacts’ exist between defendant and the forum state to justify imposition of personal jurisdiction.” (Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1313.) The burden is on the plaintiff to demonstrate by a preponderance of the evidence that all jurisdictional criteria are met. (Ziller Electronics Lab GmbH v. Sup.Ct. (Grosh Scenic Studios) (1988) 206 Cal.App.3d 1222, 1232.)

JUDICIAL NOTICE:

The court takes judicial notice of the certified copies of two fictitious business name statements recorded with the Los Angeles County Clerk (Plaintiff’s RJN, Exh. 9), but not as to the truth of facts contained in the statements. (Ev C § 452(c).)

The court declines to take judicial notice of the letter dated August 13, 2013, from Larry Metter to the City Clerk of the City of Lynwood, obtained from the website for the City of Lynwood (Plaintiff’s RJN, Exh. 8), the copy of a press release issued on behalf of Waste Management from the website of Waste Management (Plaintiff’s RJN, Exh. 10), and the copy of a letter dated June 30, 2011, from S. Kent Stoddard, obtained from the website of CalRecycle (Plaintiff’s RJN, Exh. 11). (Judicial notice of Internet pages of even official entities is improper absent an evidentiary foundation showing the following elements: (1) the author, (2) date of creation, (3) purpose, (4) reliability, and (5) veracity. (Hartwell Corp. v. Sup. Ct. (2002) 27 Cal.4th 256, 279 n. 12; See also Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 887-888 – trial court erred in taking judicial notice of a private contract between a bank and the Federal Deposit Insurance Corporation even though it was posted on the FDIC website; See also Zumbrun Law Firm v. Cal. Legis. (2008) 165 Cal.App.4th 1603, 1623 – “The website [of the California Legislature, www.leginfo.ca.gov] is not the official, printed Government Code, and makes no promises regarding its accuracy.”)

DEFENDANTS’ EVIDENTIARY OBJECTIONS:

Declaration of Joanna Baker:

1. Overruled
2. Overruled
3. Overruled

Declaration of Kethlynn E. Smith:

4. Sustained
5. Sustained
6. Sustained
7. Sustained
8-11. Sustained

GENERAL JURISDICTION:

General jurisdiction may lie for all purposes if a defendant has established a presence in the forum state by virtue of activities in the state which are extensive or wide-ranging, or substantial and systematic, in which case a defendant’s contacts take the place of physical presence within the state. (Integral Dev’t Corp. v. Weissenbach (2002) 99 Cal. App. 4th 576, 583-84.) The cause of action need not be related to the defendant’s contacts. (Thomson v. Anderson (2003) 113 Cal.App.4th 258, 265-266.)

SPECIFIC JURISDICTION:

Specific jurisdiction results when the defendant’s contacts with the forum state, though not enough to subject the defendant to the general jurisdiction of the forum, are sufficient to subject the defendant to suit in the forum on a cause of action related to or arising out of those contacts. (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 569-570.) Specific jurisdiction exists if: (1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of jurisdiction would comport with fair play and substantial justice. (Id. at 570.) Courts must additionally evaluate the burden on the defendant of appearing in the forum, the forum state’s interest in adjudicating the claim, the plaintiff’s interest in convenient and effective relief within the forum, judicial economy, and the shared interest of the several states in furthering fundamental substantive social policies. (Id.)

SPECIAL CONSIDERATIONS FOR CORPORATIONS:

Whether or not it has “qualified” to do business in California, a corporation incorporated outside California is subject to personal jurisdiction in this state if “minimum contacts” exist between it and California. (CCP § 410.10; International Shoe Co. v. Washington (1945) 326 US 310, 316.) As a practical matter, courts are usually more willing to find the requisite “contacts” in an action against a foreign corporation than in an action against a nonresident individual. Corporations often have more interstate activities, greater resources, and better ability to defend in a distant forum, making the exercise of jurisdiction “reasonable.” (See Ruger v. Sup.Ct. (Houghton) (1981) 118 Cal.App.3d 427, 433–434 — court had jurisdiction over a nonresident corporation, but not its president.)

Neither ownership nor control of a California subsidiary by itself subjects a foreign corporation to personal jurisdiction in California. (DVI, Inc. v. Sup.Ct. (Papworth) (2002) 104 Cal.App.4th 1080, 1092.) However, where the degree of control exercised by the parent corporation over the subsidiary is pervasive and continual, the parent corporation may be deemed subject to local jurisdiction for acts of its subsidiary under agency principles. (Rollins Burdick Hunter of So. Calif., Inc. v. Alexander & Alexander Services, Inc. (1988) 206 Cal.App.3d 1, 9.) In other words, if a parent corporation exercises “such a degree of control over its subsidiary corporation that the subsidiary can legitimately be described as only a means through which the parent acts, or nothing more than an incorporated department of the parent, the subsidiary will be deemed to be the agent of the parent in the forum state and jurisdiction will extend to the parent.” (Paneno v. Centres for Academic Programmes Abroad Ltd. (2004) 118 Cal.App.4th 1447, 1455–1456.)

Further, as a variant of the agency doctrine, the foreign parent may be subject to local personal jurisdiction where its subsidiary performs functions that the parent would otherwise have had to perform itself as part of its own business operations. (Sonora Diamond Corp. v. Sup.Ct. (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 542; Paneno v. Centres for Academic Programmes Abroad Ltd. (2004) 118 Cal.App.4th 1447, 1456 — doctrine applied even in the absence of a formal parent-subsidiary relationship where the local agent performed “as the United States sales, marketing, and pre-departure administration arm” for the foreign corporation; Dorel Industries, Inc. v. Sup.Ct. (Jackson) (2005) 134 Cal.App.4th 1267, 1280; Aquila, Inc. v. Sup.Ct. (City & County of San Francisco) (2007) 148 Cal.App.4th 556, 577 — doctrine “normally not required except in cases of fraud or injustice.”)

DEFENDANT’S CONTENTIONS:

Waste Management was originally incorporated in Oklahoma in 1987 under the name “USA Waste Services, Inc.”; USA Waste Services, Inc. was reincorporated as a Delaware corporation in 1995; in 1998, USA Waste Services, Inc. merged with the Oakbrook, Illinois-based waste services company formerly known as Waste Management, Inc., and simultaneously changed its name to Waste Management, Inc.; the company formerly named Waste Management, Inc. changed its name to Waste Management Holdings, Inc. and became a wholly-owned subsidiary of the new Waste Management, Inc. (Motion, Carpenter Decl. ¶ 2.) Waste Management is a publicly-traded company and operates as a true holding company in that it does not conduct operations other than investing in subsidiary or affiliated entitles. (Id. ¶ 3.) All of the operations in waste collection, transfer, disposal, recycling, and renewable energy services are conducted by the affiliated subsidiaries. (Ibid.)

Waste Management does not have offices in California, does not have employees in California, does not conduct business in California, does not control the day-to-day operations of USA Waste of California, observes separate corporate existence of USA Waste of California, and Waste Management is not a party to the lease of the property involved in this case. (Motion, Carpenter Decl. ¶¶ 4-10; Metter Decl. ¶¶ 2-5.) Waste Management did not commit any acts in or directed to California having any harmful effect in the State. (Id., Metter Decl. ¶¶ 7-9.)

The phrase “Waste Management” is a service mark, as is “WM Waste Management” and is used in connection with the offering of waste services throughout the United States, Waste Management, Inc. has consented to the use of its federally registered service marks by the operating subsidiaries, but this usage only indicates that the separate legal entities are “affiliates.” (Id. Carpenter Decl. ¶ 11; Metter Decl. ¶ 10.)

PLAINTIFF’S CONTENTIONS:

There is substantial evidence that either Waste Management was itself the actual fill operator of the property or that Waste Management directed USA Waste of California, Inc. (“USA Waste”) in their day-to-day fill operations at the property.

All lease payments were made by Waste Management as evidenced by the check stubs. (Motion, Baker Decl. ¶ 3, Exh 1 – checks are sent from Waste Management’s office in Houston, Texas.) In 2012, both Plaintiff and USA Waste agreed they would share the cost of additional investigation regarding whether the fill at the property was in compliance with applicable laws and regulation. (Id. ¶ 4.) The investigative costs were issued by Waste Management. (Id. ¶ 5, Exh. 2.)

In June 2011, USA Waste (with a business address in Houston, Texas) filed a dba with the Los Angeles County Clerk indicating that it was doing business as Waste Management (with an address in both Long Beach, California and Houston, Texas). (RJN, Exh. 9.)

As noted above, many of Defendants’ evidentiary objections to the evidence submitted by Plaintiff in support of its opposition have been sustained.

DEFENDANT’S REPLY:

Defendant notes that: (1) it is undisputed that the subject lease is between only Plaintiff and USA Waste; (2) third parties misidentified Waste Management as the operator of the Arrow Pit, but both the City of Irwindale and Plaintiff expressly acknowledged that the City incorrectly identified the operator (Reply, Empey, Exhs. 8-9); (3) “Waste Management” and “WM Waste Management” are registered service marks. It is common practice for intellectual property to be held by holding companies and licensed to related entities who conduct the operations; (4) the checks attached to the Declaration of Joanna Baker as Exhibits 1 and 2 are payments made by Waste Management Service Center, Inc. for the account of USA Waste (Carpenter Supplemental Decl. ¶¶ 2-5); and that (5) the documents Plaintiff purportedly obtained from the internet or public agencies do not support jurisdiction.

Based upon the foregoing, the court found on October 30, 2013 that Plaintiff had failed to meet its burden to demonstrate general and/or specific jurisdiction over Wast Management. However, the court continued the hearing of the motion to January 22, 2014, and then again to the present date, pursuant to Plaintiff’s request to conduct limited discovery on the issue of jurisdiction.

SUPPLEMENTAL DECLARATION OF KATHLYNNE SMITH IN OPPOSITION:

On December 13, 2013, Plaintiff served Defendants Waste Management, Inc. and USA Waste of California, Inc. with requests for production of documents. (Smith Supple Decl. ¶ 2.) Both sets of discovery included requests relating to the challenge to personal jurisdiction raised by Waste Management in this motion. (Ibid.)

Counsel for Waste Management and USA Waste indicated that he was working with his client to prepare their responses but requested that the parties enter into a stipulation for a protective order regarding the documents as he believed some of the responsive documents contain confidential proprietary information. (Id. ¶ 3.) Counsel for Plaintiff agreed at that time to such a stipulation. (Ibid.) The parties worked together to draft and finalize the protective order. (Id. ¶¶ 4-9.)

At the January 22, 2014 continued hearing, counsel for Plaintiff advised the court that Plaintiff had served document requests on both Waste Management and USA Waste, but had yet to receive responses or any documents. (Id. ¶ 11.) Counsel for Waste Management and USA Waste represented to the court that his clients would produce responsive documents in light of the protective order, and the matter was continued to March 25, 2014. (Ibid.)

On March 4, 2014, counsel for Plaintiff sent a meet and confer letter to counsel for Waste Management and USA Waste regarding the discovery responses. (Id. ¶ 12, Exh. 5.) Counsel did not receive a response until March 7, 2014, wherein counsel for Waste Management contended that Plaintiff was responsible for the delay in the production because it “made no effort to promote or facilitate the parties in drafting, signing, or filling of the [Stipulated Protective Order].” (Id., Exh. 6.) However, defense counsel’s position completely ignores that Plaintiff’s counsel actively and promptly engaged in finalizing the terms of the stipulation for a protective order, that she was the first party to sign the stipulation, that defense counsel was the last to sign the stipulation, and that prior to March 7, 2014, Plaintiff’s counsel was never advised that they were having difficulty obtaining signatures. (Ibid.) Although Waste Management and USA Waste indicated their willingness to discuss augmenting the supplemental briefing schedule, no agreement has been reached in advance of the previously ordered deadline for Plaintiff to supplement its opposition to the motion to quash, which necessitates the filing of this supplemental declaration. (Ibid.)

SUPPLEMENTAL DECLARATION OF CHRISTOPHER P. LEYEL IN SUPPORT OF THE MOTION:

Counsel for Waste Management indicates that although the court signed the Stipulated Protective Order on February 19, 2014, they could not obtain confirmation that the order had been entered until March 6, 2014, and thereafter served notice on all parties on March 7, 2014. In light of this, there was a signigicant delay in the defendants’ finalizing their respective document productions. Counsel agrees that it appears necessary to continue the hearing date once more.

In light of the foregoing, the court agrees that the hearing of the motion should be continued once more to a mutually agreed date.