The World in U.S. Courts: Fall 2014 - Personal Jurisdiction
Plaintiff Bui, a physician residing in California, entered an employment agreement with defendant GBC New Jersey, a New Jersey subsidiary of Taiwanese defendant GBC Taiwan. When Bui's employment was terminated, she filed a complaint for breach of contract against both GBC New Jersey and GBC Taiwan. GBC Taiwan moved to dismiss for lack of personal jurisdiction, and the District Court in California granted GBC Taiwan's motion.
Bui proposed two theories of personal jurisdiction over GBC Taiwan: (1) that GBC New Jersey, which did not challenge personal jurisdiction, was an alter ego or agent of GBC Taiwan and whose contacts could be attributed to its parent, and (2) that GBC Taiwan had sufficient minimum contacts on its own with California to support general personal jurisdiction.
The Court observed that a parent corporation is only chargeable with the contacts of its U.S. subsidiary if the relationship between the two companies is so close that the subsidiary could be characterized as an alter ego or agent of the parent. The Court held that Bui did not demonstrate the necessary unity of interest and ownership sufficient to make the required showing. Specifically, she presented no evidence that GBC Taiwan dictated the daily operations of GBC New Jersey, nor did she provide support for her assertion that GBC New Jersey was undercapitalized. Bui also failed to show that GBC New Jersey was an agent of GBC Taiwan, offering only conclusory allegations that "but for" the existence of GBC New Jersey, GBC Taiwan itself would have performed the activities GBC New Jersey performed.
Neither did GBC Taiwan have minimum contacts with Taiwan sufficient to support general personal jurisdiction. Bui did not show that it had "continuous and systematic" contacts with California: GBC New Jersey, not GBC Taiwan, sought out and entered into the contract with the Bui, and even if GBC Taiwan had been a party to that contract, entering a contract with a state's resident does not constitute contact sufficient to establish general jurisdiction in that state.
Finally, Bui did not satisfy the applicable three part test for establishing specific jurisdiction, which would require (1) that GBC Taiwan purposefully directed its activities at California or availed itself of the privileges of conducting activities in California, (2) that those activities gave rise to her claim, and (3) that the court's exercise of jurisdiction would be reasonable. The Court explained that, aside from the fact that Plaintiff happened to reside in California, GBC Taiwan had almost no relationship with California, and that therefore Bui could not satisfy the second part of this test by showing that her claim would not have arisen "but for" GBC Taiwan's activity in California.