lawjUSTICEBWIn its recent decision in Williams v. Yamaha Motor Co., 851 F.3d 1015 (9th Cir. 2017), the Ninth Circuit affirmed dismissal against a Japanese manufacturer because it was not “at home” in the forum. This consistent application of Daimler provides the benefit of predictable results.

In 2013, George Williams filed suit, on behalf of himself and others similar situated, against Yamaha Motor Co. Ltd (“YMC”), a Japanese corporation, and Yamaha Motor Corporation, U.S.A. (“YMUS”), YMC’s wholly-owned subsidiary. Those plaintiffs were purchasers of outboard motors, which were designed and manufactured by YMC, then, marketed and imported in California by YMUS. Despite being properly serviced and maintained, the motors failed after 500 to 700 hours of use, far less than the expected motor life of 2,000 hours. Williams alleged that YMC had knowledge of the defect, but failed to remedy the issue because the defect did not typically manifest until after the three-year warranty period expired.

After multiple amendments to the initial complaint, the district court dismissed Williams’ only remaining claim, granting YMC’s motion to dismiss for lack of personal jurisdiction and YMUS’s motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Williams appealed and the Ninth Circuit affirmed the dismissal, finding that the district court lacked general jurisdiction of YMC and that Williams failed to adequately plead the elements of his claim against YMUS.

The Ninth Circuit relied on Daimler AG v. Bauman, 134 S. Ct. 746 (2014) in reviewing the jurisdiction issue. The court stated that the analysis for general jurisdiction is whether “corporation is essentially ‘at home’ in the forum state.” The court applied this analysis and expressly considered the following facts: Japan was YMC’s principal place of business; YMC had no offices or employees in California; and YMC’s total sales in North America made up only 17% of YMC’s total net sales. Accordingly, the Ninth Circuit was persuaded that YMC was not “at home” in California.

The Ninth Circuit acknowledged that its decisions after Daimler applied the alternative “alter ego test for ‘imputed’ general jurisdiction.” Under this theory, a foreign company would need to be so intertwined with its subsidiary that neither would have a separate identity and would merely function as alter egos of each other. However, even under this theory, the Ninth Circuit found no facts regarding the “nature of the parent-subsidiary relationship. “ Accordingly, the court declined to find support for the “alter ego” theory of jurisdiction.

This case is another example of a post-Daimler court strictly following the “at home” rule of general jurisdiction over a foreign business. Some argue that Daimler’s “at home” rule is inconsistent with historical trends and serves to “shrink the jurisdiction” where suits may be brought against corporations.[1] However, these concerns are outweighed by the benefits of a clear and predictable alternative to the previous “minimum [or substantial] contacts” analysis set forth by International Shoe and its progeny.

The “at home” rule is a straightforward analysis as compared to the previous analysis.
Continue Reading Williams v. Yamaha Motor Co.: No Jurisdiction over a Foreign Company

Jury_Box_Purchased_8-13-14_iStock_000010826297SmallSince the United States Supreme Court’s decision in Daimler AG v. Bauman in 2014, general jurisdiction over a corporate defendant has become a hot topic. See 134 S. Ct. 746 (2014). In most jurisdictions, it is no longer sufficient for a plaintiff to establish a corporate defendant was registered to do business in the jurisdiction at issue or that the corporate defendant had sales and/or derived revenue in the jurisdiction at issue. Rather, there is a heightened inquiry and heavier burden placed on a plaintiff.

The Daimler Court held that a corporate defendant is deemed “at home” for purposes of establishing general jurisdiction over it in the forum where it is incorporated and in the forum where it maintains its principal place of business. Outside of those two circumstances, a corporate defendant will be considered at home only in exceptional cases.

One such exceptional case, as noted by the Daimler Court, can be found in the Perkins v. Benguet Consol. Mining Co. case wherein a corporate defendant moved its operations to Ohio out of Japanese occupied Philippines during World War II. See 342 U.S. 437 (1952). In Perkins, the president of the corporate defendant company kept an office, maintained company files, and oversaw the company’s activities in Ohio sufficient to render the defendant essentially at home in Ohio.

Many courts have interpreted the Court’s opinion in Daimler to place a heavy burden on plaintiffs to present such an exceptional case. With such a heavy burden placed on plaintiffs, the question many defendants are asking is: what amount of discovery are plaintiffs entitled to take in order to establish general jurisdiction over a corporate defendant?

The Delaware Superior Court recently faced this very question. In April 2016, the Delaware Supreme Court issued a decision in Genuine Parts Co. v. Cepec limiting the circumstances in which a defendant is deemed to be subject to general jurisdiction in the State of Delaware pursuant to Daimler. 137 A.3d 123 (Del. 2016). Shortly thereafter, Defendant Union Carbide Corporation (“UCC”) filed motions to dismiss for lack of personal jurisdiction pursuant to Daimler and Cepec in 211 cases pending in New Castle County, Delaware. The plaintiff in one of those cases – Charles Kimble – responded by serving written discovery requests and seeking the deposition of UCC’s corporate representative. In addition, plaintiffs in six additional cases[1] (out of the 211 with pending motions to dismiss) sought the deposition of The Dow Chemical Company (“Dow”) alleging Dow, as a Delaware corporation and parent to UCC, held some information relevant to whether the Delaware Superior Court could exercise general jurisdiction over UCC.

UCC responded to written interrogatories and document requests providing its basic corporate information and publicly available documents detailing its limited contacts with Delaware and its relationship with Dow. However, UCC and Dow both filed separate motions to quash the depositions of their corporate representatives (“Motions”). In their Motions, UCC and Dow argued Plaintiffs failed to provide “some indication” of a plausible basis for their
Continue Reading Daimler Ruling’s Crucial Role in Recent Delaware Court Decision