2015-00181493-CU-PL

Travelers Indemnity Co of CT vs. Taiwan Hodaka Ind Co LTD

Nature of Proceeding: Motion to Quash and Dismiss

Filed By: Torrence, Francis

If requested, oral argument will take place on Monday January 22, 2018 at 2:00 p.m. in Department 53. If that date is not convenient, the parties may meet and confer on a later date and inform the court clerk of the date no later than 4:00 p.m. on January 18, 2018.

The Motion to Quash and Motion to Dismiss by Specially Appearing Defendant Taiwan Hodaka Industrial Co., is granted.

FACTS

This is a subrogation action by Plaintiff Travelers against Defendant Taiwan Hodaka for claims of negligence, strict product liability, breach of warranty and indemnity. Travelers’ insured, Cycleurope USA, Inc., was, according to Travelers’ Complaint, a “high end bicycle manufacturer and distributor.” (Compl. at p¶ 2, 3.) According to the Complaint, Cycleurope and Taiwan Hodaka contracted for Cycleurope to purchase and distribute parts and components to be used “in the manufacture of high-end bicycles.” (Compl., ¶ 10.)

In 2005 Eric Graham, a resident of Kansas City, Missouri, purchased a bicycle in Missouri from Cycleurope. (Compl. ¶ 13.) Cycleurope had purchased some of the parts in Graham’s bicycle from Taiwan Hodaka. (Compl. ¶ 12.) In June 2012, Graham was injured while riding this bicycle when the “carbon fork [on the bicycle] broke[.]” (Compl.
¶ 14, 15.) Graham filed suit against Cycleurope in Jackson County, Missouri. (Compl.
¶ 17.) Cycleurope settled that lawsuit for $1 million (Compl. ¶ 18), which was

reimbursed by Cycleurope’s insurer, Travelers. (Compl. ¶ 20.)

ANALYSIS

A California court may exercise jurisdiction over a defendant if the defendant is 1) personally served while in the state; 2) domiciled in the state; or, 3) consents to or makes a general appearance in the action. (See Burharri v. Superior Court (1990) 495 U.S. 604; see also Schlessinger v. Holland America N.V. (2004) 120 Cal.4th 554.) Code of Civil Procedure section 419.10 permits California courts to assert personal jurisdiction over a defendant “on any basis not inconsistent with the Constitution of this state or of the United States.” (See DVI, Inc. v. Superior Court (2002) 104 Cal.App.4th 1080, 1089.)

The federal Constitution permits a state to exercise jurisdiction over a nonresident defendant if the defendant has sufficient “minimum contacts” with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” (International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.) “The substantial connection between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state.” (Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, 112.) California recognizes two forms of personal jurisdiction: general and specific. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.) General jurisdiction permits nonresident defendants to be sued on causes of action unrelated to their activities within the forum only when the defendant is “at home” in the forum. (Id. at 446; see Daimler AG v. Bauman (2014) CITE.) Specific jurisdiction is limited to cases in which the “controversy is related to arises out of the defendant’s contacts with the forum.” (DVI, supra, at 1090.) In either case, when a defendant moves to quash service of process on jurisdictional grounds, the plaintiff bears the initial burden of demonstrating facts justifying the exercise of the court’s jurisdiction. (Von’s, supra, at 449.)

“[A]ctivities that are undertaken on behalf of a defendant may be attributed to that defendant for purposes of personal jurisdiction if the defendant purposefully directed those activities toward the forum states.” (Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969, 983 [citations omitted].)

General Jurisdiction

A foreign corporation, such as Taiwan Hodaka, is subject to general jurisdiction in California only when its “affiliations with [California] are so ‘continuous and systematic’ as to render [it] essentially at home” in California. (Daimler AG, supra, [citing Goodyear Dunlop Tires Operations, SA v. Brown (2011) 131 S.Ct. 2846, 2851].) “[F]or general jurisdiction purposes, a foreign corporation’s [California] contacts must be ‘comparable to a domestic enterprise’ in California.” (Young v. Daimler AG (2014) 228 Cal.App.4th 855, 863 [citing Bauman, at fn 11].) It is well-established that even the sale or purchase of goods and service within the forum, at regular intervals, is simply not a sufficiently “substantial, continuous and systematic” activity to make a nonresident corporation “at home” in the state for purposes of general jurisdiction. (Helicopteros Nacionales de Colombia SA v. Hall (1984) 466 U.S. 408, 414-418.)

Here, Plaintiff has not shown that Taiwan Hodaka has continual and systematic

affiliations with California. There is no evidence that Taiwan Hodaka’s principle place of business is in California. Rather, Taiwan Hodaka is a Taiwanese corporation with its principle place of business in Taiwan. (Hsu Decl. at ¶¶ 3-5.) The evidence submitted by Taiwan Hodaka establishes the following: it has no employees or business representatives in California, has no offices, does not advertise in California, pays no taxes in California, and is not even licensed to do business in California. (Hsu Decl. at

¶¶ 7, 9, 12, 13, 16, 17, 19.) Indeed, Taiwan Hodaka does not even have an agent for service located in California. (Id. at 14.) In addition, the evidence establishes that the products that Taiwan Hodaka manufactures are not made in California, but instead in Taiwan, and there are no distributors of Taiwan Hodaka bicycle parts in California. (Id. at ¶¶ 5-6.) Further, Taiwan Hodaka has no real or personal property of any kind located in California. (Id. at 10-11.) In other words, all of the foregoing facts indicate that Taiwan Hodaka has done nothing in California that could establish a corporate presence akin to a “domestic enterprise.”

Plaintiff’s sole argument in favor of general jurisdiction appears to be that Taiwan Hodaka has continuous and systematic contacts with California because some of its products, though not necessarily the products at issue here, have arrived in the United States through California ports. The Court disagrees. Plaintiff makes no real attempt to show that these limited contacts, even if true, constitute the type of contacts sufficient to subject Taiwan Hodaka to general personal jurisdiction in California. For example, in Daimler AG, supra, the foreign defendant entered into a general distributor agreement with an independent contractor with several locations in California; the contractor purchased cars from Daimler in Germany, imported them into the United States, and distributed them throughout the country. (134 S.Ct. 746, 752.) The distributor’s California sales accounted for 2.4 percent of Daimler’s worldwide sales. ( Id.) The Supreme Court held that this did not suffice to confer personal jurisdiction over Daimler in California. (Id.) Similarly, in this matter, Plaintiff cites no activity that suggests that Taiwan Hodaka has made itself “at home” in California for purposes of jurisdiction.

In light of Daimler AG, and the facts set forth in Mr. Hsu’s declaration, the Court cannot conclude that the fact that Taiwan Hodaka parts may have passed through two California parts for shipment elsewhere are the type of “exceptional” circumstances that would subject Taiwan Hodaka to general jurisdiction in California.

Specific Jurisdiction

Where a nonresident defendant does not have substantial and systematic contacts with the forum state, the defendant may yet be subject to specific jurisdiction for a cause of action that arises out of or is related to the defendant’s acts, ties or connections to the state. (Helicopteros, supra, 466 U.S. at 414; Cornelison v. Chaney (1976) 16 Cal.3d 143, 147-148.) A court may exercise specific jurisdiction over a nonresident defendant only if (1) “the defendant has purposefully availed himself of herself of forum benefits with respect to the matter in controversy, (2) the controversy is related to or arises out of defendant’s contacts with the forum, and (3) the exercise of jurisdiction would comport with fair play and substantial justice.” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269 [emphasis added].) The purposeful availment inquiry focuses on the defendant’s intentions. “This prong is only satisfied when the defendant purposefully and voluntarily directs its activities toward the forum so that it should expect, by virtue of the benefit it receives, to be subject to the court’s jurisdiction based on its contacts with the forum.” (Snowney v. Harrah’s Entertainment,

Inc. (2005) 35 Cal.4th 1054, 1062.) Thus, purposeful availment occurs where a nonresident defendant “purposefully directs its activities at residents of the forum, purposefully derives benefits from its activities in the forum, creates a substantial connection with the forum, deliberately has engaged in significant activities within the forum, or has created continuing obligations between itself and residents of the forum.” (Id. at 1063.) Under this standard, an out-of-state defendant will only be subject to personal jurisdiction if it has clear notice that it is subject to suit there and can act to alleviate the risk of burdensome litigation.” (Id.)

In determining whether the exercise of jurisdiction would be fair and reasonable, so as to satisfy the third requirement for the exercise of specific jurisdiction, a court must consider (1) the burden on the defendant of defending an action in the forum; (2) the forum state’s interest in adjudicating the dispute; (3) the plaintiff’s interest in obtaining relief; (4) “the interstate [or international] judicial system’s interest in obtaining the most efficient resolution of controversies”; and, (5) the states’ or nations’ shared interest “in furthering fundamental substantive social policies.” (Asahi Metal, supra, 480 U.S. 102, 113.) “These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. On the other hand, where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” (Burger King, supra, at 477. )

Here, the Court concludes that it does not have specific jurisdiction over Taiwan Hodaka. First, there is no dispute that the injury giving rise to the underlying lawsuit occurred in Missouri and occasioned alleged harm on a Missouri resident, nor was the bicycle at issue purchased or made in California. Further, as discussed above with regard to general jurisdiction, there simply are no facts to show that Taiwan Hodaka ever created a “substantial connection” with California. The fact that Taiwan Hodaka may have shipped certain materials through California ports is of limited significance or import, if any. There is no relation of the California ports to an accident that later occurred in Missouri.

Travelers’ argument in favor of personal jurisdiction is premised on the facts that Taiwan Hodaka sold its bicycle components to Cycleurope and that Cycleurope has a business presence in California. Indeed, Cycleurope’s U.S. division is based in Hayward, California. That said, jurisdiction must be assessed on an individualized basis (see Calder v. Jones (1984) 476 U.S. 783, 790) and jurisdiction is not conferred merely because a defendant is associated with another defendant who would be subject to the court’s jurisdiction (id. [individual defendants’ contacts with forum state are not judged according to the activities of a co-defendant]; see HealthMarkets, Inc. v. Superior Court (2009) 171 Cal.App.4th 1160, 1169 [mere ownership of a subsidiary does not automatically subject a nonresident parent company to jurisdiction].) The mere fact that Taiwan Hodaka supplied parts or even entire bicycles that ultimately ended up for sale in California through Cycleurope is inconsequential. Plaintiff fails to present a sufficient evidentiary basis to show that Taiwan Hodaka purposefully availed itself of California benefits, nor has Plaintiff shown a substantial connection between Taiwan Hodaka’s own alleged contacts with the state and the claims now alleged against it, as required to establish personal jurisdiction. (See Vons, supra, at 448; Thomson v. Anderson (2003) 113 Cal.App4th 258, 266.)

Finally, the Court concludes that any exercise of jurisdiction here would violate

established notions of fair play , which falls under the third prong of the personal jurisdiction analysis. There simply are no facts, other than the location of Plaintiff’s counsel, to justify this action proceeding against Taiwan Hodaka in California, much less the Sacramento County Superior Court. As discussed at length above, California’s interest in this dispute is minimal at best and Sacramento County’s is even less. As an international defendant, the burden posed to Taiwan Hodaka if it is required to litigate in California is significant: Taiwan Hodaka is already called to answer in a foreign judicial system, where most, if not all, of the witnesses and evidence pertaining to the underlying case remain in Missouri. While Cycleurope maintains a presence in Hayward, California, that presence simply is not immediately assignable to or sufficient to justify hailing Taiwan Hodaka into a California Court.

For the foregoing reasons, Defendant’s motion to quash is granted.