California Capital Insurance Company v. Broan-Nutone, LLC ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 CALIFORNIA CAPITAL INSURANCE No. 1:21-cv-00388-NONE-SKO COMPANY, 12 FINDINGS AND RECOMMENDATIONS Plaintiff(s), TO GRANT DEFENDANT A. O. SMITH 13 CORPORATION’S MOTION TO DISMISS v. 14 [Doc. 6] 15 BROAN-NUTONE, LLC, et al., [THIRTY-DAY OBJECTION DEADLINE] 16 Defendants. 17 18 Plaintiff California Capital Insurance Company (hereinafter “CCIC”) as subrogee of GSF 19 Jackson Park Place Investors L.P. initiated this action by filing a complaint on January 29, 2021, 20 against Defendants Broan-Nutone, LLC, (hereinafter “Broan”) and A.O. Smith Corporation 21 (hereinafter “Smith”) in the Fresno County Superior Court. (Doc. 1.) Defendant Smith removed 22 the action to this Court on March 10, 2021, pursuant to 28 U.S.C. § 1441(b) based on diversity. 23 (Doc. 1.) Plaintiff contends that a fan motor assembly manufactured by Defendant Smith and 24 installed in an exhaust fan constructed, designed, manufactured, assembled, distributed and sold 25 by Defendant Broan, failed and caused a fire which resulted in substantial damage to property 26 insured by Plaintiff CCIC. (Doc. 1 at 13-14.) Plaintiff asserts causes of action for: 1) negligence; 27 and 2) strict products liability. (Doc. 1 at 14-16.) Plaintiff seeks compensatory damages for costs 28 of repairs to the subject property, plus interest from the date of its payments. (Doc. 1 at 16-17.) 1 On March 17, 2021, Defendant Smith filed a motion to dismiss on the ground that this 2 Court lacks jurisdiction over it. (Doc. 6.) Plaintiff CCIC filed an opposition on April 1, 2021. 3 (Doc. 9.) Defendant Smith filed its reply on April 8, 2021. (Doc. 10.) 4 On October 18, 2021, the pending motion to dismiss was referred to the undersigned for 5 preparation of Findings and Recommendations pursuant to 28 U.S.C. § 636(b)(1)(B) and Local 6 Rule 302. 7 I. DISCUSSION 8 Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may seek 9 dismissal of an action for lack of personal jurisdiction. In opposing such a motion, the burden of 10 proof to show that jurisdiction is appropriate lies with the plaintiff. See Picot v. Weston, 780 F.3d 11 1206, 1211 (9th Cir. 2015); Love v. Associated Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 12 2010); Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). When a defendant's motion to 13 dismiss is to be decided on the pleadings, affidavits, and discovery materials, the plaintiff need 14 only make a prima facie showing that personal jurisdiction exists in order for the action to 15 proceed. See Picot, 780 F.3d at 1211; Love, 611 F.3d at 608; Boschetto, 539 F.3d at 1015. 16 In determining whether plaintiff has met his burden to show personal jurisdiction, the 17 court accepts plaintiff's allegations as true, and any conflicts between parties over statements 18 contained in affidavits must be resolved in the plaintiff's favor. Love, 611 F.3d at 608; Boschetto, 19 539 F.3d at 1015; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 20 In meeting its burden, however, a plaintiff “cannot simply rest on the bare allegations of its 21 complaint.” Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977). 22 “Where, as here, there is no applicable federal statute governing personal jurisdiction, the 23 law of the state in which the district court sits applies.” Core-Vent Corp. v. Nobel Indus. AB, 11 24 F.3d 1482, 1484 (9th Cir. 1993); see also Yahoo! Inc. v. La Ligue Contre Le Racisme Et 25 L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (en banc) (same). “California's long-arm 26 statute allows courts to exercise personal jurisdiction over defendants to the extent permitted by 27 the Due Process Clause of the United States Constitution.” Core-Vent Corp., 11 F.3d at 1484; see 28 also Cal. Civ. Proc. Code § 410.10 (“A court of this state may exercise jurisdiction on any basis 1 not inconsistent with the Constitution of this state or of the United States.”); Love, 611 F.3d at 2 608–09. Thus, only constitutional principles constrain the jurisdiction of a federal court in 3 California. See Love, 611 F.3d at 608–09; Boschetto, 539 F.3d at 1015; Sher v. Johnson, 911 4 F.2d 1357, 1361 (9th Cir. 1990). 5 Under the Fourteenth Amendment's Due Process Clause, courts may exercise personal 6 jurisdiction over nonresident defendants only so long as there exist sufficient “minimum 7 contacts” between the defendant and the forum state. World-Wide Volkswagen Corp. v. 8 Woodson, 444 U.S. 286, 291 (1980); see also Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 9 2015); Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th 10 Cir. 2003). Maintenance of the suit must “not offend traditional notions of fair play and 11 substantial justice.” Yahoo!, 433 F.3d at 1205 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 12 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Generally, there are two different types of personal 13 jurisdiction which meet this due process standard: general jurisdiction and specific jurisdiction. 14 Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., __ U.S. __, 141 S. Ct. 1017, 1024, 209 L. Ed. 15 2d 225 (2021); Bristol-Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773, 1779-80 (2017); 16 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.15, 105 S.Ct. 2174, 85 L.Ed.2d 528 17 (1985); Picot, 780 F.3d at 1211. Here, Defendant Smith contends the Court lacks both general 18 and specific personal jurisdiction over it. (Doc. 6 at 2-9.) In its opposition, Plaintiff does not 19 dispute that the Court lacks general personal jurisdiction; Plaintiff claims, however, that the Court 20 has specific personal jurisdiction. (Doc. 9 at 2-4.) 21 A. General Jurisdiction 22 “A court may assert general jurisdiction over foreign (sister-state or foreign-country) 23 corporations to hear any and all claims against them when their affiliations with the State are so 24 ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear 25 Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 26 (2011) (quoting Int'l Shoe, 326 U.S. at 317, 66 S.Ct. 154); see also Ford Motor Co., 141 S. Ct. at 27 1024. “With respect to a corporation, the place of incorporation and principal place of business 28 are ‘paradig[m] ... bases for general jurisdiction.’” Daimler AG v. Bauman, 571 U.S. 117, 137, 1 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (internal citation omitted); see also Ford Motor Co., 141 2 S.Ct. at 1024. Thus, “[a] corporation that operates in many places can scarcely be deemed at 3 home in all of them.” Cahen v. Toyota Motor Corp., 147 F. Supp. 3d 955, 965 (N.D. Cal. 2015) 4 (quoting Daimler AG, 571 U.S. at 139 n.20, 134 S.Ct. 746). 5 Here, Defendant Smith is a Delaware corporation with its principal place of business in 6 Milwaukee, Wisconsin. (Doc. 6-2 at 2.) Thus, Defendant Smith is “at home” in Delaware and 7 Wisconsin, and subject to general personal jurisdiction there. Defendant Smith’s “affiliations 8 with [California] are [not] so ‘continuous and systematic’ as to render [it] essentially at home” in 9 California to support general jurisdiction. Goodyear, 564 U.S. at 919 (quoting Int'l Shoe, 326 10 U.S. at 317). Therefore, the Court should decline to exercise general jurisdiction over Defendant 11 Smith. Plaintiff CCIC does not contend otherwise in its opposition. 12 B. Specific Jurisdiction 13 Specific jurisdiction exists where the litigation is derived from obligations that “arise out 14 of or are connected with the [company's] activities within the state.” Helicopteros Nacionales de 15 Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). In 16 determining whether a court has specific jurisdiction over a non-resident defendant, the Ninth 17 Circuit has set forth a three-pronged test for determining whether a defendant has sufficient 18 minimum contacts with the forum state: 19 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he 20 purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; 21 (2) the claim must be one which arises out of or relates to the defendant's forum-related 22 activities; and 23 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 24 25 Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1142 (9th Cir. 2017) (citing Schwarzenegger, 374 26 F.3d at 802); see also Picot, 780 F.3d at 1211; Williams v. Yamaha Motor Co. Ltd., 851 F.3d 27 1015, 1023 (9th Cir. 2017). Plaintiff has the burden of establishing the first two of these prongs, 28 and a “strong showing on one axis will permit a lesser showing on the other.” Yahoo!, 433 F.3d at 1 1210. “If the plaintiff fails to satisfy either of these prongs, personal jurisdiction is not 2 established in the forum state.” Schwarzenegger, 374 F.3d at 802. “If the plaintiff succeeds in 3 satisfying both of the first two prongs, the burden then shifts to the defendant to ‘present a 4 compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (citing Burger 5 King Corp. v. Rudzewicz, 471 U.S. 462, 476–78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)); see 6 also CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011); Sinatra v. 7 Nat'l Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988). 8 1. Purposeful Availment and Direction 9 Under the first prong of the three-part specific jurisdiction test, a plaintiff must establish 10 that the defendant either purposefully availed itself of the privilege of conducting activities in 11 California, or purposefully directed its activities toward California. Schwarzenegger, 374 F.3d at 12 802 (emphasis added). Purposeful availment and purposeful direction are two distinct concepts. 13 Id. Where the cause of action at issue lies in intentional tort, courts analyze the purposeful 14 direction factor using the “Calder effects” test. See Schwarzenegger, 374 F.3d at 802, 805 (citing 15 Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984)); Holland Am. Line, Inc. v. 16 Wartsila N. Am., Inc., 485 F.3d 450 (9th Cir. 2007). Because Plaintiff's action is based upon 17 strict products liability and negligence (see Doc. 1 at 9-17), this Court applies the “purposeful 18 availment” framework. Burger King, 471 U.S. at 476. 19 Under the purposeful availment framework, the Court asks whether a defendant has 20 “‘deliberately engaged in significant activities within a State” such that it “has availed [it]self of 21 the privilege of conducting business there.” Burger King, 471 U.S. at 476. The contacts must be 22 the defendant's own choice and not “random, isolated, or fortuitous.” Keeton v. Hustler 23 Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984). They must show that 24 the defendant deliberately “reached out beyond” its home -- by, for example, “exploi[ting] a 25 market” in the forum State or entering a contractual relationship centered there. Walden v. Fiore, 26 571 U.S. 277, 285, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (internal quotation marks and 27 alterations omitted). “Yet even then -- because the defendant is not ‘at home’ -- the forum State 28 may exercise jurisdiction in only certain cases.” Ford Motor Co., 141 S.Ct. at 1025. 1 In determining whether a company had purposefully availed itself of the privilege of 2 doing business in a state, courts have looked at the “stream of commerce plus” theory identified 3 in Asahi Metal Indus. Co. v. Superior Court of California, Solano City., 480 U.S. 102, 107 S.Ct. 4 1026, 94 L.Ed.2d 92 (1987). In Asahi, the Supreme Court held that “[t]he placement of a product 5 into the stream of commerce, without more, is not an act of the defendant purposefully directed 6 toward the forum State.” Asahi, 480 U.S. at 112, 107 S.Ct. 1026. However, the Court recognized 7 that additional conduct such as “designing the product for the market in the forum State, 8 advertising in the forum State, establishing channels for providing regular advice to customers in 9 the forum State, or marketing the product through a distributor who has agreed to serve as the 10 sales agent in the forum State,” could be sufficient. Id. Whether the “additional conduct” alleged 11 is sufficient to constitute purposeful availment is a case-by-case analysis particular to each 12 Defendant. 13 According to the sworn declarations supplied by Defendant Smith, in 1997, Defendant 14 Smith acquired all of the operational facilities and assets of Uppco, Inc. (Doc. 6-2 at 2.) Prior to 15 1997, Uppco, Inc., and following the acquisition, Defendant Smith, manufactured fractional 16 horsepower motors that were sold to Defendant Broan for inclusion in exhaust fans. (Doc. 6-2 at 17 2.) Defendant Smith does not have any manufacturing facilities or administrative offices in the 18 State of California. (Doc. 6-2 at 2.) Neither Defendant Smith nor Uppco, Inc., manufactured the 19 motors sold to Defendant Broan in California. (Doc. 6-2 at 2.) Defendant Smith did not design, 20 manufacture, or develop any of the electric motor component parts sold to Defendant Broan in the 21 state of California. (Doc. 6-2 at 2.) Defendant Smith did not engage in the design, development, 22 manufacturing or testing of electric motor components in California. (Doc. 6-2 at 3.) Defendant 23 Smith claims to have no record of any shipments of motors being made to Defendant Broan in 24 California. (Doc. 6-2 at 3.) Defendant Smith did not participate in the final sale or assembly of the 25 subject exhaust fan or of any Defendant Broan product. (Doc. 6-2 at 3.) Thus, Defendant Smith 26 placed its product - its fan motor assembly components - in the stream of commerce, but it cannot 27 be said that Defendant Smith purposefully directed its product toward California. Defendant 28 Smith did not avail itself of the privilege of doing business in California because the placement of 1 its fan motor assembly into the hands of individual consumers was a result of third-party action, 2 not Defendant Smith’s action. 3 Other courts have found that a company purposefully avails itself of the forum state when 4 it takes action to “target” that specific state. Rodoni v. Royal Outdoor Prod., Inc., 2019 WL 5 2300400, at *5 (D. Mont. May 30, 2019) (citing Moseley v. Suzuki Motor of Am., Inc., 2018 WL 6 539330, at *2 (D. Idaho Jan. 24, 2018)); see J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 7 877, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011) (finding that specific jurisdiction was lacking where 8 “at no time had [the defendant] advertised in, sent goods to, or in any relevant sense targeted the 9 State.”) (emphasis added). There is nothing in the moving papers showing that Defendant Smith 10 targeted California in any way with its design, manufacture, and sale of the fan motor assembly 11 components. In light of Defendant Smith’s lack of any activity in California, the Court finds that 12 Defendant Smith did not deliberately avail itself of the privilege of doing business in California. 13 2. Direct Relationship 14 “In order for a state court to exercise specific jurisdiction, the plaintiff’s claims “must 15 arise out of or relate to the defendant's contacts” with the forum. Bristol-Myers, 582 U. S., at ––– 16 –, 137 S.Ct., 1780 (quoting Daimler AG, 571 U.S., at 127, 134 S.Ct. 746; alterations omitted); 17 see, e.g., Burger King, 471 U.S., at 472, 105 S.Ct. 2174; Helicopteros Nacionales de Colombia, 18 466 U.S. at 414; International Shoe, 326 U.S. at 319. “[T]here must be ‘an affiliation between the 19 forum and the underlying controversy, principally, [an] activity or an occurrence that takes place 20 in the forum State and is therefore subject to the State's regulation.’” Bristol-Myers, 137 S.Ct. at 21 1780 (quoting Goodyear, 564 U.S. at 919). In determining when a plaintiff's claims arise out of a 22 defendant's forum-related conduct, the Ninth Circuit follows the “but for” test. Menken v. Emm, 23 503 F.3d 1050, 1058 (9th Cir. 2007). In other words, Plaintiff “must show that he would not have 24 suffered an injury ‘but for’ [Defendant]'s forum-related conduct.” Id. 25 As previously noted, Defendant Smith lacks any significant contacts with California. 26 Defendant Smith did not design, assemble, manufacture, or test its fan motor assembly in 27 California. Nor did it ship any of its fan motors to Defendant Broan in California, or participate 28 in the final assembly, marketing and sale of Defendant Broan’s exhaust fan in California. Given 1 these circumstances, Plaintiff fails to demonstrate that it would not have sustained its injury but 2 for Defendant Smith’s actions. 3 For the foregoing reasons, the Court finds that Plaintiff has failed to carry its burden of 4 demonstrating that Defendant Smith purposefully availed itself of the privilege of conducting 5 activities in California. Schwarzenegger, 374 F.3d at 802. Because Plaintiff cannot satisfy the 6 first two components, the Court need not analyze the third prong of the specific jurisdiction 7 analysis. Accordingly, the Court finds that Plaintiff has failed to meet its burden for establishing 8 specific jurisdiction, and Defendant Smith should be DISMISSED with prejudice for lack of 9 personal jurisdiction. 10 C. Jurisdictional Discovery 11 In opposing the motion, Plaintiff avers that the relationship between Defendant Smith and 12 Uppco, Inc., will become more clear after discovery is taken in the matter. Discovery should 13 ordinarily be granted where “pertinent facts bearing on the question of jurisdiction are 14 controverted or where a more satisfactory showing of the facts is necessary.” Butcher's Union 15 Local No. 498, United Food & Commercial Workers v. SDC Inv., Inc., 788 F.2d 535, 540 (9th 16 Cir. 1986) (quoting Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 17 1977)). However, “[w]here a plaintiff's claim of personal jurisdiction appears to be both 18 attenuated and based on bare allegations in the face of specific denials made by defendants, the 19 Court need not permit even limited discovery.” Terracom v. Valley Nat'l Bank, 49 F.3d 555, 562 20 (9th Cir. 1995) (internal quotations omitted); see also Boschetto, 539 F.3d at 1020 (affirming 21 denial of request for jurisdictional discovery “based on little more than a hunch that [discovery] 22 might yield jurisdictionally relevant facts”). Thus, limited discovery should not be permitted 23 merely to conduct a “fishing expedition.” Mackovich v. United States, No. 1:06-cv-00422-SMS 24 (PC), 2008 WL 2053978, *1 (E.D. Cal. May 13, 2008) (denying discovery where plaintiff made 25 “no showing that if further discovery were allowed, the outcome of the motion to dismiss would 26 be affected”) (citing Laub v. U.S. Dep't of the Interior, 342 F.3d 1080, 1093 (9th Cir. 2003)). 27 Here, Plaintiff has not met its burden of establishing the existence of personal jurisdiction 28 over Defendant Smith. Plaintiff has also failed to explain how limited discovery on Defendant 1 Smith’s and Uppco, Inc.’s relationship would reveal any facts that would give rise to personal 2 jurisdiction. Plaintiff makes no argument that Uppco, Inc., is subject to either general or specific 3 jurisdiction. Nor does Plaintiff rebut the sworn declaration that Uppco, Inc., did not manufacture 4 the motor sold to Defendant Broan in California. (Doc. 6-2 at 2.) Plaintiff has therefore not 5 established that jurisdictional discovery is justified on this basis, and the Court should not permit 6 the speculative discovery Plaintiff seeks. See Boschetto, 539 F.3d at 1020 (holding that district 7 court did not abuse its discretion in denying request for discovery that was based on “little more 8 than a hunch that it might yield jurisdictionally relevant facts”); Nimbus Data Sys., Inc. v. Modus 9 LLC, No. 14-cv-04192 NC, 2014 WL 7387200, at *7 (N. D. Cal. Dec. 29, 2014) (denying request 10 for jurisdictional discovery “based entirely on the speculation that discovery might reveal facts 11 that support general jurisdiction”). 12 RECOMMENDATION 13 For the foregoing reasons, the Court RECOMMENDS that Defendant Smith’s motion to 14 dismiss be GRANTED. 15 This Findings and Recommendation is submitted to the United States District Court Judge 16 assigned to this case, pursuant to the provisions of 28 U.S.C. section 636 (b)(1)(B) and Rule 304 17 of the Local Rules of Practice for the United States District Court, Eastern District of California. 18 Within thirty (30) days after being served with a copy, any party may file written objections with 19 the Court. Such a document should be captioned “Objections to Magistrate Judge’s Findings and 20 Recommendation.” Replies to the Objections shall be served and filed within ten (10) court days 21 (plus three days if served by mail) after service of the Objections. The Court will then review the 22 Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636 (b)(1)(C). The parties are advised that 23 failure to file objections within the specified time may waive the right to appeal the Order of the 24 District Court. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 25 IT IS SO ORDERED. 26 27 Dated: November 23, 2021 /s/ Sheila K. Oberto . UNITED STATES MAGISTRATE JUDGE 28