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C.A. Says German Auto Maker Is Subject to Product Liability Action in California
Opinion Says Foreign Manufacturer, Which Places Vehicles Into Market Through U.S. Distributor, Had Sufficient Contacts to Justify Summons, Drawing Dissent
By a MetNews Staff Writer
The Third District Court of Appeal has held, in a 2-1 decision, that the German car manufacturer Audi AG, which sells cars in the U.S. market through a domestic distributor, had sufficient minimum contacts with California—under a stream-of-commerce theory—to justify the assertion of personal jurisdiction over it in a state-court product liability action.
It is alleged that one of its cars pinned a child against a garage wall after unexpectedly surging forward.
In an opinion, filed Wednesday and authored by Justice Elana Duarte, the court acknowledged that the U.S. Supreme Court jurisprudence in the area of stream-of-commerce jurisdiction is murky—as multiple cases have resulted in plurality opinions with justices failing to agree on a precise rule—but said that “under any of the analyses articulated by the various lead opinions, there is enough in this particular case for Audi to be properly summoned.”
Acting Presiding Justice Harry E. Hull Jr. joined in the opinion and Justice Jonathan K. Renner dissented. Renner objected to what he believed was the majority’s reliance on Audi’s contacts with the U.S. as a whole and argued that the court failed to examine evidence of the German company’s contacts within the state of California.
Product Liability Claim
Appealing an order granting Audi’s motion to quash the summons were plaintiffs minor Logan Woodland and his mother, Jennifer Woodland, who filed a complaint, together with other family members, against Audi and an independent U.S. distributor, Volkswagen Group of America Inc (“VWGoA”), asserting a products liability claim.
In the operative complaint, the plaintiffs allege that on Aug. 17, 2020, the family’s 2014 Audi Q7 “suddenly and without warning, due to…not having the available rollaway technologies installed, and because of the failure of the onboard driver alert systems…, surged forward, crushing LOGAN WOODLAND against the garage wall, resulting in severe and permanent injuries.”
The car in question was first sold in the U.S. by VWGoA to Santa Monica Audi, a dealership, and Audi does not dispute that Jennifer Woodland purchased the vehicle in California.
VWGoA, which is a separate corporate entity from the German manufacturer, serves as the exclusive importer and distributor of Audi-manufactured vehicles in the U.S. It is the only entity that markets, advertises, and sells Audis in the country by providing them to authorized dealerships across the U.S., including ones in California.
Audi has no offices in California, is not licensed to do business in the state, and does not have a registered agent or other person authorized to accept service of process.
Motion to Quash
The Woodlands argue that specific jurisdiction may be asserted over the German company because Audi indirectly and systematically serves the California market by delivering its vehicles into the stream-of-commerce through VWGoA.
Audi contends that, as a foreign manufacturer, it is not subject to personal jurisdiction in California because it does not conduct activities in that state and does not directly send its products to that state.
Placer Superior Court Judge Michael W. Jones sided with the defendant, saying:
“Plaintiffs’ admissible evidence does not sufficiently establish Audi AG conducts significant business in California….The only evidence presented by plaintiffs to demonstrate Audi AG’s economic activity in California is the sale of the Audi Q7 in Santa Monica. This singular sale of an Audi vehicle does not equate to Audi AG purposefully availing itself to the laws of California.”
Wednesday’s opinion reverses the order and directs the trial court to enter a new order denying the motion to quash.
Duarte noted that a court may exercise specific jurisdiction over a nonresident defendant only if the party has “purposefully availed” itself of the forum’s benefits, the controversy is related to the defendant’s contacts with the state, and the assertion would comply with notions of fair play and substantial justice; she concluded all these elements were met here.
Supreme Court Jurisprudence
The justice pointed out that “[t]he stream-of-commerce theory of personal jurisdiction stems from” the 1980 U.S. Supreme Court case of World-Wide Volkswagen Corp. v. Woodson, in which the court held that an Oklahoma state court improperly asserted personal jurisdiction over a New York Audi dealership and distributor in a lawsuit filed after a fire erupted in the vehicle while the plaintiffs were driving through Oklahoma.
Finding that it must be reasonably foreseeable that the defendant would face court action in the state based on its “minimum contacts” with the forum, the high court concluded that the exercise of jurisdiction could not based on the customer’s unilateral decision to drive in Oklahoma when the defendants had done nothing to serve the automobile market there.
Following the World-Wide Volkswagen decision, Duarte said “United States Supreme Court justices have provided competing versions of the scope of the [stream-of-commerce] theory in plurality decisions.”
The most recent example is the 2011 case of J. McIntyre Machinery Ltd. v. Nicastro. In that case, no opinion garnered a majority but six justices agreed that the plaintiff had failed to establish facts justifying the exercise of personal jurisdiction over a foreign manufacturer.
Then-Justice Anthony Kennedy, now retired, joined by three justices, adopted a so-called “stream-of-commerce plus” approach, calling for some additional conduct, beyond awareness that the product is being sold in the forum state, indicating an intent to serve that market.
Then-Justice Breyer, also now retired, joined by one justice, argued that a plaintiff trying to establish personal jurisdiction over a foreign manufacturer must show a “regular flow” or “regular course” of sales in the forum state.
Duarte said that “[b]ecause Justice Breyer’s concurring opinion ‘furnished the narrowest grounds for the decision,’ it is the controlling opinion.”
She also pointed to the 2021 U.S. Supreme Court decision in Ford Motor Co. v. Montana Eighth Judicial District Court, which she acknowledged was not a “stream-of-commerce case” but noted that it “explain[ed] that the exact fact pattern of that case—a resident plaintiff sues a global car company, extensively serving the state market in a vehicle, for an in-state accident—was ‘a paradigm example’ of how specific jurisdiction works.”
Present Case
Applying these principles to the instant case, she wrote:
“We conclude the record here contains competent evidence establishing the existence of specific jurisdiction over Audi under a stream-of-commerce theory. This is because the record shows that Audi, through its distributor VWGoA, intentionally placed its vehicles into the regular flow of commerce to the United States, including to California. In reaching this conclusion, we are mindful that…the United States Supreme Court has not agreed on the precise requirements necessary to establish specific jurisdiction under a stream-of-commerce theory….”
She continued:
“[T]he minimum contacts standard is met under the rule announced in World-Wide Volkswagen….The assertion of specific jurisdiction over Audi is also proper under the stricter steam-of-commerce plus approach….J. McIntyre also confirms that, ‘at a minimum, a plaintiff trying to establish personal jurisdiction over a foreign manufacturer must show a “regular…flow”…of sales in the forum state….’….Here, the regular flow of Audi’s cars to California is evidenced by the record as a whole.”
The jurist declared:
“Under the circumstances presented, the purposeful availment and relatedness requirements of specific jurisdiction were satisfied. Given the evidence demonstrating that Audi has continuously and deliberately exploited California’s automobile market for its economic benefit through VWGoA, Audi must reasonably anticipate being [hauled] into California courts to defend the very type of action this case presents: a products liability action seeking to recover damages for injuries allegedly caused by a defective Audi vehicle in California.”
Duarte added that “we have little difficulty in finding that the exercise of personal jurisdiction…is fair and reasonable.”
Renner’s Dissent
Renner wrote:
“I share the majority’s reluctance to enter the debate between stream of commerce theories….On the record before us, however, I would conclude plaintiffs failed to present competent evidence of jurisdictional facts satisfying even the most lenient standard.”
He said that “[a]lthough the majority accurately characterizes Justice Breyer’s concurring opinion in J. McIntyre as ‘controlling,’…they seem to ignore the conclusion, compelled by plurality and concurring opinions alike, that the relevant forum is California, not the United States.”
The justice remarked:
“On the record before us, I would accept the trial court’s finding that, ‘[t]he only evidence presented by plaintiffs to demonstrate Audi AG’s economic activity in California is the sale of the Audi Q7 in Santa Monica.’ I would then affirm on the ground that the ‘singular sale of an Audi vehicle’…does not establish a regular flow or regular course of sales to California….Doing so would not only respect the inferences drawn by the trial court, it would spare us the task of deciding difficult constitutional questions on an incomplete record. I would save those questions for another day and a more complete record.”
The case is L.W. v. Audi AG, 2025 S.O.S. 171.
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