The World in U.S. Courts: Fall 2015 - Personal Jurisdiction/Forum Non Conveniens | August.11.2015
Cristal Arabia is a privately-held Saudi Arabian corporation with primary operations in Jeddah, Kingdom of Saudi Arabia. In 2007, Cristal acquired Millennium Inorganic Chemicals, Inc., a Maryland-based manufacturer of titanium dioxide. Plaintiffs brought an indirect purchaser class action against Millennium, its parent, and other domestic manufacturers of titanium dioxide, alleging they engaged in a conspiracy to fix the price of titanium dioxide sold in the United States.
The District Court in California explained that personal jurisdiction over Cristal Arabia could be asserted under theories of agency or alter ego only if "the parent and subsidiary are 'not really separate entities,' such that one entity's contacts with the forum state can be fairly attributed to the other" or if the subsidiary's presence "substitutes for the presence of the parent." The Court found that this standard was not satisfied. Plaintiffs relied upon allegations relating to (1) Cristal Arabia's direct and controlling ownership interest in Millennium; (2) Millennium's role as the primary importer and distributor of Cristal Arabia's products; (3) Cristal Arabia's control over Millennium's marketing, purchasing, pricing, management, and/or operating policies; (4) Cristal Arabia's role in approving Millennium's significant business decisions, and (5) the overlapping functions and operations of Cristal Arabia and Millennium. The Court found none of the arguments persuasive, finding the allegations either too vague or consistent with Millennium's retention of its corporate identity. The Court rejected Plaintiffs' argument that Cristal Arabia's control over Millennium's operations was evidenced by Cristal Arabia's meeting with customers and approving pricing decisions, noting that Cristal's president traveling to the United States twice a year and the CEO owning a house in Maine suggested only "the most sporadic participation in customer meetings" and did not evidence the type of control required for a finding of agency or alter ego. Further, the Court noted that Plaintiffs' personal jurisdiction assertion was undermined by the declaration of a Millennium VP, which stated that Millennium maintains its own corporate records and bank accounts, files its own taxes, has its own employees, and owns its own titanium dioxide plants.
The Court also considered whether jurisdiction could independently be based on Cristal Arabia's own contacts with the United States. The Court rejected the possibility of general personal jurisdiction, finding that the possible residence in the US of several Cristal Arabia representatives could not support a finding that Cristal Arabia was "at home" in the U.S.—the standard articulated by the U.S. Supreme Court in the Daimler case.
Plaintiffs finally argued that Cristal Arabia was subject to the Court's specific personal jurisdiction, a finding that would require Cristal Arabia to have either purposefully directed its activities with the forum state or purposefully availed itself of the privilege of conducting activities in the forum. Plaintiffs alleged that this test was satisfied by Cristal Arabia's allegedly routine approvals of collusive prices set by Millennium. The Court disagreed, explaining that "purposeful direction" requires Cristal Arabia to have committed (1) an intentional act, (2) expressly aimed at the forum state, (3) causing harm that Cristal Arabia knew was likely to be suffered in the forum state. The Court found that Plaintiffs' failure to satisfy the requirement of pleading an intentional act was dispositive, noting that Cristal Arabia's alleged approval of Millenniums' pricing decision, without more, was not evidence of its participation in any price fixing conspiracy.