Thursday, December 22, 2011
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C.A. Rejects Suit Against Canadian Firm Over Exploding Jet Ski
By SHERRI M. OKAMOTO, Staff Writer
A Canadian corporation cannot be sued in this state for injuries caused by an exploding jet ski on the California side of Lake Havasu, the Court of Appeal for this district has ruled.
Div. One yesterday ordered published its Nov. 30 decision holding that the placement of a product into the stream of commerce in a foreign country, with the knowledge that it may be swept into California, is not enough to subject a defendant to personal jurisdiction here.
The defendant, Dow Chemical Canada ULC, was the successor-in-interest to the Canadian corporation which had manufactured the allegedly defective fuel tank for the Sea-Doo GSX watercraft which blew up in August 2008. The nine plaintiffs, all California residents, alleged that they were injured as a result.
After being served with the complaint, Dow appeared specially and moved to quash service of the summons on the ground that it lacked the requisite minimum contacts with California to justify the state’s assertion of personal jurisdiction.
No Contacts
The company asserted that its principal place of business is in Calgary, Alberta, and that it has never been qualified to do business in California. Dow Canada maintains no offices or other facilities within the state, and has no agent for service of process in California.
In addition, Dow Canada denied having ever advertised any products within the state, or having sold any item to customers here. The company contended that all gas tanks made and sold by the former Wedco Division of Union Carbide Canada were manufactured exclusively in Canada, and that the products which are the subject of this litigation were sold by Union Carbide Canada to Bombardier Inc., exclusively in Canada, pursuant to purchase order agreements entered into in Canada.
The plaintiffs argued that the Los Angeles Superior Court could take specific jurisdiction over Dow Canada because the company knew that its gas tanks were being installed in products that would be sold in the United States, including California.
As proof of Dow’s knowledge, they provided the declaration of a Bombardier employee which asserted that sometime “in the early 1990s,” he told unidentified “representatives” of Union Carbide Canada that Bombardier personal watercraft, which incorporated the component gas tanks, would be sold across the United States, including California.
Purposeful Availment
Judge Conrad Richard Aragon denied Dow’s motion to quash based solely on this declaration, finding “as a matter of law, Union Carbide, and therefore Dow, purposely availed itself of this jurisdiction for the sale and distribution of its component parts.”
The appellate court later denied Dow’s petition for writ of mandate and the California Supreme Court declined to grant discretionary review. This June, however, the U.S. Supreme Court granted Dow’s petition for certiorari and remanded the matter to the Court of Appeal for further consideration.
Writing for the appellate court, Justice Jeffrey W. Johnson acknowledged that “at no time did Dow (successor to Union Carbide Canada) engage in any activities in California that reveal an intent to invoke or benefit from the protection of its laws” and that there was no evidence that the design of Dow’s product was “in any way California-specific.”
Based on the Supreme Court’s June decision in J. McIntyre Machinery v. Nicastro, 131 S.Ct. 2780—which rejected the “stream of commerce plus” theory of jurisdiction over a manufacturer who sold goods with the expectation they would be purchased in a certain forum—Johnson concluded “it is not sufficient for jurisdiction in this case that the defendant Dow might have predicted or known that its products would reach California.”
No Shipment
Since Union Carbide Canada never undertook to ship its components to California, he explained, “[i]t matters not whether Union Carbide Canada knew or could have predicted that another party—Bombardier Inc.—would sell Sea-Doos incorporating the Union Carbide Canada gas tanks in California.”
Johnson said the Supreme Court has now made clear that “[d]ue process requires that Dow have engaged in additional conduct, directed at the forum, before it can be found to have purposefully availed itself of the privilege of conducting activities within California.”
Presiding Justice Robert M. Mallano and Justice Frances Rothschild joined Johnson in his opinion.
Dow was represented by Gennaro A. Filice III and Paul R. Johnson of King & Spalding along with Troy D. McMahan and James L. Mink of Brown Eassa & McLeod.
Real Party in Interest Bombardier Inc. was represented by William O. Martin, Jr., Jules S. Zeman and R. Bryan Martin of Haight Brown & Bonesteel.
The case is Dow Chemical Canada ULC v. Superior Court (Fandino), 11 S.O.S. 6884.
Copyright 2011, Metropolitan News Company