District Court Authorizes Jurisdictional Discovery to Clarify Foreign Corporation's Connection to U.S.

The World in U.S. Courts: Fall 2015 - Personal Jurisdiction/Forum Non Conveniens | September.30.2015

Hume v. Farr's Coach Lines, Ltd., U.S. District Court for the Western District of New York, September 30, 2015

Plaintiff Stephanie Hume sued Daimler Buses of North America, Ltd. ("DBNA, Ltd.") for negligence, breach of warranty, and other causes of action. DBNA Ltd., which is incorporated in Canada and has its principal place of business there, moved to dismiss for lack of personal jurisdiction.

The District Court in New York began by noting that personal jurisdiction is either general or specific. General personal jurisdiction exists when a defendant's affiliations with the forum are so continuous and systematic as to render it essentially "at home" in the state. Specific personal jurisdiction, on the other hand, depends on a connection between the state and an action or occurrence that takes place in the state. Plaintiff alleged both general and specific jurisdiction over DBNA, Ltd.

Analyzing general personal jurisdiction, the Court first considered when a non-U.S corporation has sufficiently systematic contact with a state as to render it "at home" in the state.  The Court observed that the U.S. Supreme Court's 2014 decision in the Daimler case (unrelated to the present dispute) established that general personal jurisdiction could exist over a corporation that was neither organized under the laws of nor having a principal place of business in a state only in "exceptional cases." Despite this, the Court explained that DBNA Ltd. could still be "at home" in New York under the "alter ego" theory of personal jurisdiction. Under this theory, if a subsidiary of a company is not acting like an independent entity but rather as a "mere department" or "alter ego" of the parent company, and if personal jurisdiction over the parent exists, then personal jurisdiction will be found to exist over the subsidiary as well. The Court reasoned that the alter ego theory could apply in this case, as Plaintiff plausibly alleged facts suggesting that DBNA, Ltd. was a mere department of Daimler Buses North America, Inc. ("DBNA, Inc."), incorporated in New York. Because there were still outstanding questions regarding the connection of DBNA, Ltd. to DBNA, Inc., the Court granted Plaintiff's request for jurisdictional discovery.

The Court also concluded jurisdictional discovery was appropriate to determine if specific personal jurisdiction over DBNA, Ltd. existed. Specific personal jurisdiction may exist over a foreign corporation that transacts business with the forum or commits tortious acts outside the forum causing injury inside the forum, and where the plaintiff's claim arises from that contact. DBNA, Ltd. argued it was a foreign distributor which sold only to Canadian companies, without knowledge that its buses would end up in New York. Plaintiff responded by alleging DBNA, Ltd., part of an American company (DBNA, Inc.) and should have known, based on the identify of its customers, that its buses would be used in New York. The Court concluded that specific personal jurisdiction might exist, based on an agency theory and facts showing that DBNA, Ltd. had reason to believe any tortious activity in Canada would have a direct effect in New York. The Court therefore authorized jurisdictional discovery into DBNA Ltd.'s corporate connections and its transactions with Canadian companies.

RETURN TO Fall 2015 Edition 

RETURN TO The World in U.S. Courts Home Page

U.S. Laws Discussed

Editorial Board