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Jazini by Jazini v. Nissan Motor Co. - 148 F.3d 181 (2d Cir. 1998)

Rule:

In determining whether the subsidiary is a "mere department" of the parent, a court must consider four factors. First, "common ownership" must be shown. Second, there must be financial dependency of the subsidiary on the parent corporation. Third, the degree to which the parent corporation interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities must be examined. And fourth, the degree of control over the marketing and operational policies of the subsidiary exercised by the parent must be weighed.

Facts:

Plaintiffs Ali Jazini and Mina Mahmoudieh, individually and behalf of P.J., their minor son, all of whom were residents of the State of New York, filed a product liability action in federal district court against Nissan Motor Co., Ltd. (Nissan Japan), a Japanese Corporation, after they were injured when a Nissan Patrol automobile, which one of the Jazinis was driving in Iran, lost its rear wheel assembly and crashed. The accident was caused by a defective part of the assembly, which broke while the automobile was running. The district court's jurisdiction rested upon the diversity provision of 28 U.S.C.S. § 1332(a). The district court granted Nissan Japan's motion to dismiss for want of personal jurisdiction on the ground that plaintiffs failed to show a sufficient degree of control by Nissan Japan over its domestic subsidiary. On appeal, plaintiffs contended that Nissan Japan's domestic subsidiary was sufficiently controlled by Nissan Japan such that the extension of personal jurisdiction would have been proper.

Issue:

Did the district court have personal jurisdiction over Nissan Japan?

Answer:

No.

Conclusion:

The appellate court affirmed the district court's judgment dismissing plaintiff's action for want of personal jurisdiction over Nissan Japan. The court concluded that plaintiffs merely presented conclusory allegations that the domestic subsidiary was Nissan Japan's agent, and that such conclusory statements were an insufficient basis for exerting personal jurisdiction. Similarly, the court held that assertions of close control in Nissan Japan's annual report were an insufficient basis to establish its dominion over its domestic subsidiary. Plaintiffs could not justify the exertion of personal jurisdiction solely through conclusory allegations that Nissan Japan exerted dominion over its domestic subsidiary and that the subsidiary was Nissan Japan's agent in New York.

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