Law School Case Brief
Asahi Metal Indus. Co. v. Superior Court - 39 Cal. 3d 35, 216 Cal. Rptr. 385, 702 P.2d 543 (1985)
The stream of commerce theory of personal jurisdiction has also been applied to component part manufacturers. Jurisdiction over a nonresident defendant is constitutional where the defendant delivers its products into the stream of commerce with the expectation that they will be purchased in the forum state.
Gary Zurcher brought a products liability action against Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin), the Taiwanese manufacturer of a motorcycle tire tube, and others for injuries sustained in a motorcycle accident, allegedly caused by a defect in the tube. Cheng Shin, in turn, filed a cross-complaint seeking indemnity from its codefendants and from Asahi Metal Industry Co., Ltd. (Asahi), the Japanese manufacturer of the valve assembly used in the tube. Asahi moved to quash service of summons. The declarations presented to the trial court established that, although Asahi had no offices, property, or agents in California, solicited no business in California, and made no direct sales in the state, its indirect business in the state was substantial. Moreover, it did substantial business with Cheng Shin and knew that some of the valve assemblies sold to Cheng Shin would be incorporated into tubes sold in California. The trial court denied the motion to quash, finding that Asahi had the requisite minimum contacts with California and that jurisdiction was fair and reasonable. Asahi sought a writ of mandate to compel the trial court to grant its motion.
Can California constitutionally exercise personal jurisdiction over a manufacturer of component parts who made no direct sales in California but had knowledge that a substantial number of its parts would be incorporated into finished products sold in the state?
The Supreme Court of California denied Asahi's petition for writ of mandate. The court held that, given the substantial nature of Asahi’s indirect business in the State of California, and its knowledge that its valve assemblies would be incorporated into tubes sold by Cheng Shin in California, Asahi introduced its products into the stream of commerce with the expectation that they would be sold in California, and that this conduct satisfied the due process requirement of minimum contacts with the forum state. Moreover, the court held that jurisdiction in California was fair and reasonable, given California's interest in protecting its consumers, and the interests of California and Cheng Shin in avoiding inconsistent results and multiplicity of litigation. The court took judicial notice of the fact that, subsequent to the filing of the petition for writ of mandate, Zurcher’s complaint had been dismissed with prejudice, presumably pursuant to a settlement, but held that this did not dissipate California's interest in asserting jurisdiction over Asahi.
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