Court Finds No Personal Jurisdiction over Japanese Parent Company on Basis that Parent-Subsidiary Relationship Does Not Satisfy Minimum Contacts

The World in U.S. Courts: Summer and Fall 2016 - Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA) | June.29.2016

Park-Kim v. Daikin Industries, LTD., U.S. District Court for the Central District of California, August 3, 2016

Park-Kim brought several causes of action against Daikin Industries (DIL), Daikin Applied Americas, and Daikin North America (Daikin NA) alleging injuries associated with the allegedly defective evaporation coils made with copper tubing used in the defendant’s heating, ventilation, and air conditioning units (HVAC units).  DIL and Daikin NA moved to dismiss on the basis that the Court did not have personal jurisdiction over them.  

In considering DIL’s motion to dismiss the District Court in California focused on “specific personal jurisdiction,” which arises when a defendant has sufficient “minimum contacts” contacts with the forum State relating to the plaintiff’s claims and the exercise of jurisdiction is otherwise “reasonable.”  In performing its analysis the Court used a three-part test.  First, it considered whether DIL had “purposefully availed” itself of the privilege of conducting business within the forum state such that being sued there would be a foreseeable event.  The Court rejected Park-Kim’s argument that the test could be satisfied by evidence that (1) the defendants had placed products into the “stream of commerce” and that each defendant was an agent, joint venturer, or employee of the other such that personal jurisdiction could be imputed to all defendants if there were jurisdiction over any one of them.  The Court explained that DIL had presented evidence that it did not place the product into the stream of commerce and noted that even if the evidence were otherwise, conduct more specifically directed towards the forum case was required.  Further, the Court reasoned that Park-Kim’s “legal conclusions” that a parent-subsidiary relationship imputes personal jurisdiction over all defendants was not persuasive or consistent with relevant case law. Finally, the Court explained that though DIL did sell certain products to Japanese distributors to be sold in the United States generally, the only pertinent contacts were those with California.

Second, the Court considered whether the plaintiff’s claims “arose out of” DIL’s forum-related activities, asking whether the claims would have arisen “but for” DIL’s contact with the California.  The Court concluded that Park-Kim had made only conclusory allegations that DIL manufactured the only named product in the complaint, unsupported by facts.  The defendants, by contrast, submitted a sworn affidavit denying their involvement in the design or manufacture of the alleged defective product as well as having any role in the supply chain.  Since the plaintiffs failed to satisfy the first two prongs of the test to establish personal jurisdiction, the court did not need to analyze the third:  that exercising personal jurisdiction over the defendant would be reasonable.  The court thus found that the requirements for personal jurisdiction had not been satisfied and dismissed the claims against DIL.

The court also dismissed the claims against Daikin NA for lack of personal jurisdiction, first finding that Daikin NA was not “at home” in California, and thus could not be subject to general personal jurisdiction.

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