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Bombardier Recreational Prods., Inc. v. Dow Chem. Canada ULC - 216 Cal. App. 4th 591, 157 Cal. Rptr. 3d 66 (2013)

Rule:

The concept of minimum contacts requires states to observe certain territorial limits on their sovereignty. It ensures that the states, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. To do so, the minimum contacts test asks whether the quality and nature of the defendant's activity is such that it is reasonable and fair to require him to conduct his defense in that state. The test is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite affiliating circumstances are present. Under the minimum contacts test, personal jurisdiction may be either general or specific.

Facts:

The underlying plaintiff sued appellant Bombardier Recreational Products, Inc. (Bombardier), for personal injuries. He claimed that in 2007, while trying to start a Sea-Doo personal watercraft manufactured by Bombardier, the watercraft caught fire, causing him serious injuries. He alleged Bombardier was negligent for failing to inform him of a recall for the watercraft's allegedly defective fuel tank.

Bombardier filed a cross-complaint against respondent Dow Chemical Canada ULC (Dow Canada). Dow Canada is a successor to Union Carbide Canada, Inc. (Union Carbide Canada), whose Wedco Moulded Products division (Wedco), for a time, manufactured fuel tanks Bombardier installed in its personal watercraft.

Appearing specially, Dow Canada filed a motion to quash service of summons for lack of personal jurisdiction. It contended it and its predecessors lacked sufficient contacts with California to be subject to suit here. Prior to 1998, Wedco manufactured fuel tanks and fuel tank filler necks used by Bombardier in its personal watercraft. The fuel tanks were manufactured exclusively in Canada. Wedco sold the fuel tanks to Bombardier exclusively in Canada pursuant to purchase orders made in Canada. Bombardier manufactured its personal watercraft in Canada. Union Carbide Canada sold Wedco to an unrelated third party in 1998. Union Carbide Canada, including Wedco, never had a registered agent in California, never qualified to do business in California, never manufactured any products in California, never had any employees, offices, or facilities in California, and never advertised or sold any personal watercraft fuel tanks or fuel tank filler necks in California.

In its opposition to the motion to quash service, Bombardier did not contest Dow Canada's factual assertions. Rather, it argued Dow Canada had sufficient contacts with California because Union Carbide Canada had known Bombardier would incorporate its fuel tanks and fuel tank filler necks in personal watercraft it intended to sell in the United States, including California. Bombardier submitted a declaration from one of its component part buyers, Pierre Biron, stating he had informed Union Carbide Canada its fuel tanks and fuel tank filler necks would be used in watercraft sold across the United States, including California. Bombardier also submitted a declaration from its director of intellectual property, Jean Daunais, stating Union Carbide Canada, as part of its contract to supply Bombardier with fuel tanks, had agreed to produce tanks that complied with regulatory standards promulgated by the United States Coast Guard.

Dow Canada objected to Bombardier's evidence in part because the declarations were signed under penalty of perjury under the laws of the United States of America, not the laws of the State of California as required by Code of Civil Procedure section 2015.5.

The trial court granted the motion to quash, and it sustained the objections against Bombardier's evidence. It determined California lacked personal jurisdiction because Dow Canada lacked minimum contacts with the state. Dow Canada had not purposefully engaged in activities in the state or availed itself of the benefits of conducting business here. The court sustained Dow Canada's objections to Bombardier's evidence, but it stated that even if Dow Canada had known Bombardier would sell the watercraft in the United States or had agreed to design the fuel tanks in compliance with United States regulations, Dow Canada's contacts with California would be attenuated at best and insufficient to establish personal jurisdiction.

Issue:

Did Dow Canada's knowledge that its products would eventually enter the stream of commerce in California sufficient to establish jurisdiction?

Answer:

No.

Conclusion:

We thus rely on the California Supreme Court's most recent description of the purposeful availment requirement as our guide to resolving this case, understood in light of J. McIntyre’s holdings that mere foreseeability is insufficient to establish minimum contacts, and that the existence of jurisdiction is determined based on an individualized assessment of the facts. “ ‘ “The purposeful availment inquiry … focuses on the defendant's intentionality. This prong is only satisfied when the defendant purposefully and voluntarily directs [its] activities toward the forum so that [it] should expect, by virtue of the benefit [it] receives, to be subject to the court's jurisdiction based on” [its] contacts with the forum.’ Thus, purposeful availment occurs where a nonresident defendant ‘ “purposefully direct[s]” [its] activities at residents of the forum’ (Burger King, supra, 471 U.S. at p. 472), ‘ “purposefully derive[s] benefit” from’ its activities in the forum, ‘create[s] a “substantial connection” with the forum’, ‘ “deliberately” has engaged in significant activities within’ the forum, or ‘has created “continuing obligations” between [itself] and residents of the forum’ By limiting the scope of a forum's jurisdiction in this manner, the ‘ “purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated” contacts … .’ Instead, the defendant will only be subject to personal jurisdiction if ‘ “it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the state.” ’ 

“Where, as here, ‘ “no conflict in the evidence exists … the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record.” ’

Applying this test to the undisputed facts before us, we conclude Dow Canada lacks the minimum contacts with California that would subject it to California's jurisdiction. Dow Canada and its predecessors did not purposefully direct their activities toward the residents of California. They created no substantial connection with California or continuing obligations between them and California. They did not deliberately engage in any significant activities within California. Because of their lack of contacts with California, they could not reasonably expect to be subject to California's jurisdiction.

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