District Court Dismisses Case against Japanese Corporations that only Sold Products to the U.S. Indirectly

The World in U.S. Courts: Summer and Fall 2016 - Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA)

Mitsui Sumitomo Ins. U.S.A, Inc. v. Kyocera Mita Corp., U.S. District Court for the Central District of California, July 25, 2016

Plaintiffs Mitsui Sumitomo Insurance U.S.A, Inc. and Mitsui Sumitomo Insurance Company of America sought reimbursement from Defendants Kyocera Mita Corporation, Kyocera Document Solutions, Inc. (“KDS”), and Kyocera Document Technology Co., Ltd. (“KTD”), to recover money the plaintiffs paid on behalf of an entity they insured, Kyocera Document Solutions America, Ltd. (“Kyocera America”).  Kyocera America is a copier distributor.  Plaintiffs claimed that the defendants designed and manufactured a defective copier that its affiliate Kyocera America later distributed, which caused a fire and resulted in the plaintiffs paying claims.  The defendants moved to dismiss the case, claiming that they did not have sufficient minimum contacts with California to support the assertion of personal jurisdiction over them.  KDS is a Japanese corporation and KDT is a Chinese corporation; the former has its principal place of business in Japan, and the latter, in China. Neither company has ever maintained an office or facility in California, sold products directly to customers in California, or employed agents or employees in California.  All of KDT’s products are sold to Kyocera Document Technologies, a Hong Kong-based corporation, which then sells them to KDS to be distributed internationally. All KDS products that are sold in the United States are distributed by Kyocera America, which is a wholly-owned subsidiary of KDS.

The Court stated that personal jurisdiction over a defendant generally is proper where authorized by the forum state’s long-arm statute and consistent with the Due Process Clause of the U.S. Constitution.  In this case, California’s long-arm statute allows for personal jurisdiction to the fullest extent allowed by the Due Process Clause.

The Court first considered general personal jurisdiction, which can only be found over a defendant corporation if the corporation conducts “continuous and systematic” activities in the forum state, such that it could be considered “essentially at home” there.  The plaintiffs asserted only that KDS loaned thirty-five employees to Kyocera America and Kyocera Document Solutions Development America (“KDDA”), and that this rendered KDS at home in California. The Court disagreed, concluding that KDS has no physical presence in the State, and that the “handful” of employees it loaned to Kyocera America and KDDA did not qualify it as being “at home” there.  Moreover, the Court found that the plaintiffs did not provide enough specific information as to the nature or duties of those employees, how long they had been in California, and how long they were likely to stay even to warrant serious consideration.  Because of these deficiencies and the fact that the plaintiffs did not make any general personal jurisdiction arguments regarding KDT, the Court found it had no general personal jurisdiction over the defendants.

The Court then considered whether it could exercise specific personal jurisdiction over the defendants, stating that to do so would require that a nonresident defendant have at least “minimum contacts” with the forum state and that the exercise of jurisdiction “does not offend traditional notions of fair play and substantial justice.”  Here, the Court found that neither KDS nor KDT had sufficient connections to California to support jurisdiction.  It explained that KDS did not have sufficient control over Kyocera America to create such a connection, and that the corporation did not take any affirmative action toward California.  The Court also explained that KDT’s connections to California were even further attenuated than KDS’s, and as such, specific personal jurisdiction could not be established with regard to KDT, either.

Because the Court lacked personal jurisdiction over the defendants, it granted their motion to dismiss the case.

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