State Of Washington v. Lg Electronics, Inc. ( 2015 )

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
STATE OF WASHINGTON,
DIVISION ONE
Respondent,
No. 70298-0-1
v. (linked with No. 70299-8-1)
LG ELECTRONICS, INC.;
KONINKLUKE PHILIPS
ELECTRONICS N.V. a/k/a ROYAL
PHILIPS ELECTRONICS N.V.;
PHILIPS ELECTRONICS INDUSTRIES
(TAIWAN), LTD.; SAMSUNG SDI CO.,
LTD. f/k/a SAMSUNG DISPLAY
DEVICE CO., LTD.; SAMSUNG SDI
AMERICA, INC.; SAMSUNG SDI
MEXICO S.A. DE C.V.; SAMSUNG SDI PUBLISHED OPINION
BRASIL LTDA.; SHENZHEN
SAMSUNG SDI CO., LTD.; TIANJIN
SAMSUNG SDI CO., LTD.;
SAMSUNG SDI (MALAYSIA) SDN.
BHD.; PANASONIC CORPORATION
f/k/a MATSUSHITA ELECTRIC
INDUSTRIAL CO., LTD.; HITACHI
DISPLAYS, LTD.; HITACHI
ELECTRONIC DEVICES (USA), INC.;
HITACHI ASIA, LTD.,
Appellants,
LG ELECTRONICS U.S.A., INC.;
PHILIPS ELECTRONICS NORTH
AMERICA CORPORATION; TOSHIBA
CORPORATION; TOSHIBA AMERICA
ELECTRONIC COMPONENTS, INC.;
MT PICTURE DISPLAY CO., LTD.;
PANASONIC CORPORATION OF
NORTH AMERICA; HITACHI, LTD.;
No. 70298-0-1 (linked with No. 70299-8-l)/2
CHUNGHWA PICTURE TUBES LTD.;
CPTF OPTRONICS CO., LTD.;
CHUNGHWA PICTURE TUBES
(MALAYSIA) SDN. BHD.,
Defendants. FILED: January 12, 2015
Dwyer, J. — In resolving this appeal, which requires us to consider the
due process limitations on the exercise of personal jurisdiction over certain
foreign corporations, we hold that because a product manufactured by these
foreign corporations was sold—as an integrated component part of retail
consumer goods—into Washington in high volume over a period of years, the
corporations "purposefully" established "minimum contacts" in Washington.
Owing to our conclusion that the Attorney General alleged sufficient "minimum
contacts" to support an exercise of specific jurisdiction by Washington courts,
and in view of our further conclusion that such exercise would not offend notions
of "fair play and substantial justice," we reverse the trial court's order dismissing
the Attorney General's complaint for lack of personal jurisdiction and remand for
further proceedings.
I
On May 1, 2012, the Attorney General,1 acting on behalf of the State and
as parens patriae on behalfof persons residing in Washington, brought suit
1At the time that the complaint was filed, the Attorney General of Washington was
Robert M. McKenna. The current Attorney General is Robert W. Ferguson.
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against more than 20 foreign corporate entities.2 While geographically diffuse,
the defendants had a common characteristic—past participation in the global
market for cathode ray tubes (CRTs).3 The Attorney General broadly alleged that
the defendants had, in violation of the Washington Consumer Protection Act4
(CPA), participated in a worldwide conspiracy to raise prices and set production
levels in the market for CRTs, which caused Washington State residents and
State agencies to pay supracompetitive prices for CRT products.5
The Attorney General claimed that the defendants manufactured, sold,
and/or distributed CRT products, directly or indirectly, to customers throughout
the United States and, specifically, in Washington. He further alleged that the
actions of the defendants were intended to and did have a direct, substantial, and
reasonably foreseeable effect on United States domestic import trade and
commerce, and on import trade and commerce into and within Washington.
Indeed, he averred that the defendants' alleged conspiracy to fix prices affected
billions of dollars in United States commerce and damaged a large number of
Washington State agencies and residents.
In support of this, the Attorney General maintained that because, until
recently, CRTs were the dominant technology used in displays such as
2 These entities were scattered across four continents and ten different countries,
including South Korea, Taiwan, China, Japan, Malaysia, Singapore, the United States ofAmerica,
Mexico, Brazil, and the Netherlands.
3Acathode ray tube is a display technology used in televisions, computer monitors, and
other specialized applications. According to the Attorney General, CRTs, until recently,
represented the "dominant technology for manufacturing televisions and computer monitors."
4Ch. 19.86 RCW.
5The Attorney General defined CRT products as "CRTs and products containing CRTs,
such as televisions and computer monitors."
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televisions and computer monitors, this translated into the sale of millions of CRT
products during the alleged conspiracy period, which resulted in billions of dollars
in annual profits to the defendants. The Attorney General alleged that during the
entirety of the alleged conspiracy period, North America represented the largest
market for CRT televisions and computer monitors, and that the 1995 worldwide
market for CRT monitors was 57.8 million units, 28 million of which were
purchased in North America. The Attorney General claimed that CRT monitors
accounted for over 90 percent of the retail market for computer monitors in North
America in 1999 and that CRT televisions accounted for 73 percent of the North
American television market in 2004. The Attorney General averred that during
the alleged conspiracy period, the CRT industry was dominated by relatively few
companies, and that, in 2004, four of the defendants in this case together held a
collective 78 percent share of the global CRT markets.
Byway of relief, the Attorney General sought (1) injunctive relief, (2) civil
penalties, (3) damages for State agencies, and (4) restitution for consumers who
purchased CRTs or CRT products, whether directly or indirectly.
After accepting service of process, and prior to any discovery being
conducted, certain defendants (collectively Companies6) filed motions, supported
by affidavits and declarations, to dismiss the Attorney General's complaint for
lack of personal jurisdiction pursuant to CR 12(b)(2). These affidavits and
6 Koninklijke Philips Electronics N.V., Philips Electronics Industries (Taiwan), Ltd.,
Panasonic Corporation, Hitachi Displays, Ltd., Hitachi Asia, Ltd., Hitachi Electronic Devices
(USA), Inc., LG Electronics, Inc., Samsung SDI America, Inc., Samsung SDI Co., Ltd., Samsung
SDI (Malaysia) SDN. BHD., Samsung SDI Mexico S.A. DE C.v., Samsung SDI Brasil LTDA.,
Shenzhen Samsung SDI Co., Ltd., and Tianjin Samsung SDI Co., Ltd.
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declarations contained testimony that the Companies had never sold CRTs or
CRT products to Washington customers or done any business in Washington.
In response, the Attorney General maintained that, for purposes of
resolving the Companies' dispositive motions, the aforementioned affidavits and
declarations should not be considered by the trial court. In the event that they
were considered, however, the Attorney General requested an opportunity to
conduct both general and jurisdictional discovery. The Companies opposed the
Attorney General's request.
The trial court granted the Companies' motions and dismissed the
Attorney General's complaint as against them. In doing so, the trial court denied
the Attorney General's request to conduct discovery. Upon an agreed motion,
the trial court entered final judgment with prejudice pursuant to CR 54(b).7 The
Attorney General filed a timely appeal.
Additionally, the trial court authorized the Companies to request attorney
fees and costs. With the exception of the Philips entities, the Companies
submitted briefing requesting fees, along with supporting affidavits. The trial
7Judgment Upon Multiple Claims or Involving Multiple Parties. When more
than one claim for relief is presented in an action, whether as a claim,
counterclaim, cross claim, or third party claim, or when multiple parties are
involved, the court may direct the entry of a final judgment as to one or more but
fewer than all of the claims or parties only upon an express determination in the
judgment, supported by written findings, that there is no just reason for delay and
upon an express direction for the entry ofjudgment. The findings may be made
at the time of entry of judgment or thereafter on the court's own motion or on
motion of any party. In the absence of such findings, determination and
direction, any order or other form of decision, however designated, which
adjudicates fewer than all the claims or the rights and liabilities of fewer than all
the partiesshall not terminate the action as to any of the claims or parties, and
the order or other form of decision is subject to revision at any time before the
entry ofjudgment adjudicating all the claims and the rights and liabilities of all the
parties.
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court granted their request for fees pursuant to RCW 4.28.185(5).8 The Attorney
General appeals from this award pursuant to RAP 2.4(g).9
Certain defendants10 sought and obtained discretionary review of two
issues related to whether certain claims of the Attorney General were time-
barred. That matter has been resolved by separate opinion. State v. LG
Electronics, Inc., No. 70299-8-I (Wash. Ct. App. Dec. 22, 2014). The underlying
litigation has been stayed.
II
The Attorney General contends that the trial court's order dismissing his
complaint for lack of personal jurisdiction over the Companies was entered in
error. We agree. The allegations in the Attorney General's complaint, when
treated as verities, are sufficient to satisfy his prima facie burden of showing that
personal jurisdiction comports with due process considerations. Considered
together, the Attorney General's allegations demonstrate the following: (1) that
the Companies "purposefully" established "minimum contacts" with Washington,
(2) that the harm claimed by the Attorney General "arose" from those minimum
contacts, and (3) that the exercise ofjurisdiction in this matter is consistent with
8This is the attorney fee provision ofWashington's long-arm statute. It states that, "[i]n
the event the defendant is personally served outside the state on causes ofaction enumerated in
this section, and prevails in the action, there may be taxed and allowed to the defendant as part
ofthe costs ofdefending the action a reasonable amount to be fixed by the court as attorneys'
fees." RCW 4.28.185(5).
9"An appeal from a decision on the merits of a case brings up for review an award of
attorney fees entered after the appellate court accepts review of the decision on the merits." RAP
2.4(g).
10 LG Electronics, Inc., LG Electronics U.S.A. Inc., Koninklijke Philips Electronics N.V.
a/k/a Royal Philips Electronics N.V., Philips Electronics North America Corporation, Toshiba
Corporation, Toshiba America Electronic Components, Inc., Hitachi, Ltd., Hitachi Displays, Ltd.,
Hitachi Electronic Devices (USA), Inc., and Hitachi Asia, Ltd.
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notions of "fair play and substantial justice."
A
Civil Rule 12 is entitled "Defenses and Objections." Section (b), entitled
"How Presented," reads as follows:
Every defense, in law or fact, to a claim for relief in any pleading,
whether a claim, counterclaim, cross claim, or third party claim,
shall be asserted in the responsive pleading thereto if one is
required, except that the following defenses may at the option of
the pleader be made by motion: (1) lack of jurisdiction over the
subject matter, (2) lack ofjurisdiction over the person, (3) improper
venue, (4) insufficiency of process, (5) insufficiency of service of
process, (6) failure to state a claim upon which relief can be
granted, (7) failure to join a party under rule 19. A motion making
any of these defenses shall be made before pleading if a further
pleading is permitted. No defense or objection is waived by being
joined with one or more other defenses or objections in a
responsive pleading or motion. If a pleading sets forth a claim for
relief to which the adverse party is not required to serve a
responsive pleading, he may assert at the trial any defense in law
or fact to that claim for relief. If, on a motion asserting the defense
numbered (6) to dismiss for failure of thepleading to state a claim
upon which relief can be granted, matters outside the pleading are
presented to andnotexcluded by the court, the motion shall be
treated as one for summary judgment and disposed of as provided
in rule 56, and allparties shall be given reasonable opportunity to
presentallmaterial madepertinent to such a motion by rule 56.
(Emphasis added.)
Thus, whereas CR 12 envisions the possibility that the submission of
evidence by one party may cause a CR 12(b)(6) motion to be converted into a
CR 56 motion, it does not, by its terms, envision the same for motions brought
pursuant to subsection (b)(2).11
11 "When interpreting court rules, the court approaches the rules as though they had been
drafted by the Legislature." State v. Greenwood. 120 Wash. 2d 585, 592, 845 P.2d 971 (1993).
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Nevertheless, our case law does not prohibit the introduction of evidence
in support of a motion brought pursuant to CR 12(b)(2). However, when this
occurs prior to full discovery, neither CR 12(b) itself, nor controlling case law,
provides that the motion be analyzed as if it were brought pursuant to CR 56.
Instead, our case law sets out the particular requirements for evaluation of such
a CR 12(b)(2) motion.12
"'When the trial court considers matters outside the pleadings on a motion
to dismiss for lack of personal jurisdiction, we review the trial court's ruling under
the de novo standard of review for summary judgment.'" Columbia Asset
Recovery Grp.. LLC v. Kelly, 177 Wash. App. 475, 483, 312 P.3d 687 (2013)
(quoting Freestone Capital Partners LP v. MKA Real Estate Opportunity Fund I.
LLC, 155 Wash. App. 643, 653, 230 P.3d 625 (2010)). When reviewing a grant of a
motion to dismiss for lack of personal jurisdiction, we accept the nonmoving
party's factual allegations as true and review the facts and all reasonable
inferences drawn from the facts in the light most favorable to the nonmoving
party. Freestone, 155 Wash. App. at 653-54; accord Walden v. Fiore, U.S. ,
134 S. Ct. 1115, 1119 n.2, 188 L. Ed. 2d 12(2014). It is the plaintiffs burden to
establish a prima facie case that jurisdiction exists. Freestone. 155 Wash. App. at
654; see also FutureSelect Portfolio Mamt. Inc. v. Tremont Grp. Holdings, Inc..
"The language must be given its plain meaning according to English grammar usage." State v.
Raper. 47 Wash. App. 530, 536, 736 P.2d 680 (1987).
12 After a fair opportunity for discovery, a party may, of course, bring a motion to dismiss
for want of personal jurisdiction as a CR 56 motion. Similarly, ifthe facts are in dispute, and if
there is not otherwise a rightto have a jury determine the particular facts at issue, CR 12(d)
provides for a determinative hearing on the matter prior to trial.
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175 Wash. App. 840, 885-86, 309 P.3d 555 (2013) ("The plaintiff has the burden of
demonstrating jurisdiction, but when a motion to dismiss for lack of personal
jurisdiction is resolved without an evidentiary hearing," the plaintiff's burden is
only that of a prima facie showing of jurisdiction), aff'd, 180 Wash. 2d 954, 331 P.3d
29 (2014).
The Companies agree that review is de novo. However, they assert that
the allegations in the Attorney General's complaint may not be treated as verities
for purposes of determining personal jurisdiction. The Companies contend that
when a defendant moves to dismiss for lack of personal jurisdiction and, in doing
so, offers affidavits or declarations to rebut the allegations in the plaintiff's
complaint, the plaintiff may not rely on the complaint's factual averments but,
rather, must submit evidence in order to satisfy its burden of proof. Given that, in
support of their motions to dismiss, the Companies offered sworn testimony
controverting the Attorney General's allegations, they maintain that it was
incumbent upon the Attorney General to offer evidence to substantiate his
allegations.13 The Companies' position, which is at variance with our prior
decisions, is untenable.
Even where the trial court has considered matters outside the pleadings
on a CR 12(b)(2) motion to dismiss for lack of personal jurisdiction, "[f]or
purposes of determining jurisdiction, this court treats the allegations in the
13 The Companies' position is based on the premise that, in a CR 56 context, the
nonmoving party must produce evidence in support of its claims and may not merely rely on the
allegations in its complaint or other pleadings. See Baldwin v. Sisters of Providence in Wash.,
Inc.. 112Wn.2d 127, 132, 769 P.2d 298 (1989).
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complaint as established." Freestone, 155 Wash. App. at 654; accord State v. AU
Optronics Corp.. 180 Wash. App. 903, 912, 328 P.3d 919 (2014); FutureSelect. 175
Wash. App. at 885-86; SeaHAVN. Ltd. v. Glitnir Bank. 154 Wash. App. 550, 563, 226
P.3d 141 (2010); Shaffer v. McFadden. 125 Wash. App. 364, 370, 104 P.3d 742
(2005); CTVC of Haw. Co. v. Shinawatra, 82 Wash. App. 699, 708, 919 P.2d 1243,
932 P.2d 664 (1996); Hewitt v. Hewitt. 78 Wash. App. 447, 451-52, 896 P.2d 1312
(1995); In re Marriage of Yocum. 73 Wash. App. 699, 703, 870 P.2d 1033 (1994);
Harbison v. Garden Valley Outfitters. Inc.. 69 Wash. App. 590, 595, 849 P.2d 669
(1993); MBM Fisheries. Inc. v. Bollinger Mach. Shop & Shipyard. Inc.. 60 Wn.
App. 414, 418, 804 P.2d 627 (1991): see also Raymond v. Robinson, 104 Wn.
App. 627, 633, 15 P.3d 697 (2001) (Division Two); Precision Lab. Plastics. Inc. v.
Micro Test. Inc.. 96 Wash. App. 721, 725, 981 P.2d 454 (1999) (Division Two);
Bvron Nelson Co. v. Orchard Momt. Corp.. 95 Wash. App. 462, 467, 975 P.2d 555
(1999) (Division Three). Our Supreme Court has recognized this approach and
adopted the same. See FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp.
Holdings. Inc.. 180 Wash. 2d 954, 963-64, 331 P.3d 29 (2014) (standard applies
when full discovery has not been conducted); Lewis v. Bours, 119 Wash. 2d 667,
670, 835 P.2d 221 (1992).14
14 We note the existence of two cases from the electric typewriter era that indicate to the
contrary. Access Rd. Builders v. Christenson Elec. Contracting Enq'q Co., 19 Wash. App. 477, 576
P.2d 71 (1978) (Division One), and Puqet Sound Bulb Exch. v. Metal Bldas. Insulation Inc.. 9 Wn.
App. 284, 513 P.2d 102 (1973) (Division Two). In both cases, it appears that each party offered
evidence and that neither plaintiff sought to have the court treat the allegations in its complaint as
established. Neither case discusses the issue as presented herein and both, to the extent that
they are inconsistent with recent precedent, have been overtaken by the previously cited, uniform
authority from the Supreme Court and all three divisions ofthe Court ofAppeals. Similarly, in
Carriaan v. California Horse Racing Board. 60 Wash. App. 79, 802 P.2d 813 (1990), which cited to
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Resolving jurisdictional matters at an early stage is an important
objective;15 yet, our liberal notice pleading system,16 which allows plaintiffs to
"use the discovery process to uncover the evidence necessary to pursue their
claims," tempers this aspiration. Putman v. Wenatchee Valley Med. Ctr.. P.S..
166 Wash. 2d 974, 983, 216 P.3d 374 (2009);17 cf Bryant v. Joseph Tree. Inc., 119
Wash. 2d 210, 222, 829 P.2d 1099 (1992) ("The notice pleading rule contemplates
that discovery will provide parties with the opportunity to learn more detailed
information about the nature of a complaint."); Mose v. Mose. 4 Wash. App. 204,
209, 480 P.2d 517 (1971) ("the notice pleading concept inherent in the rules
anticipates that the issues to be tried will be delineated by pretrial discovery").
See generally FutureSelect. 180 Wash. 2d at 963 ("At this stage of the litigation, the
Access Road Builders as authority for treating the motion to dismiss as a CR 56 motion, itdoes
not appear that the plaintiff argued that the court should treat the allegations in the complaint as
true.
In this matter, the trial judge did not purport to be holding the Attorney General to the
standard of production that must be satisfied in order to withstand a CR 56 motion for summary
judgment: "I don't mean thatthis is a summary judgment motion. Iam not trying to convert this
into a summary judgment motion." This disavowal indicates that the trial judge, in spite of his
erroneous dismissal of the Attorney General's complaint, understood correctly that, in considering
whether to dismiss the Attorney General's complaint forwant of personal jurisdiction over the
Companies, it was incumbent upon the court to treatas verities the averments contained therein.
15 See, e^, Sanders v. Sanders. 63 Wash. 2d 709, 715, 388 P.2d 942 (1964) ("[Wjhen
jurisdictional problems are left unsettled while various other matters are presented . .. [t]he result
is too often confusion, guess work and uncertainty, as well as probable delay, hardship and
expense to the parties.").
16 "Washington follows notice pleading rules and simply requires a 'concise statement of
the claim and the relief sought.'" Champagne v. Thurston County. 163Wn.2d 69, 84, 178 P.3d
936 (2008) (quoting Pac. Nw. Shooting Park Ass'n v. City ofSequim, 158 Wash. 2d 342, 352, 144
P.3d 276 (2006)); accord CR 8.
17 In Putman, our Supreme Courtstruck down a statute requiring medical malpractice
plaintiffs to submit a certificate of merit from a medical expert prior to discovery, ruling thatthis
requirement violated the plaintiffs' right ofaccess to the court, which "'includes the right of
discovery authorized by the civil rules.'" 166 Wash. 2d at 979 (quoting John Doe v. Puget Sound
Blood Ctr.. 117 Wash. 2d 772, 780, 819 P.2d 370 (1991)).
Asimple rule emerges from Putman and the cases previously cited: If the defendant's
motion to dismiss is to be decided by crediting the averments in the plaintiffs complaint,
discovery is not required. However, if the defendant's motion to dismiss is to be decided based
on evidence or the lack thereof, full and reasonable discovery must be afforded.
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allegations of the complaint establish sufficient minimum contacts to survive a
CR 12(b)(2) motion. . .. [The defendant] may renew its jurisdictional challenge
after appropriate discovery has been conducted.") Were we to embrace the
Companies' position, we would create a false world—one existing solely as the
result of litigation strategies. Here, the Companies brought their CR 12(b)(2)
motions, submitting factual averments therewith, prior to full discovery taking
place. The Companies then successfully resisted the Attorney General's attempt
to conduct discovery directed to the personal jurisdiction issue. This is a litigation
strategy designed to subvert, rather than advance, the purpose of our liberal
notice pleading regime—to facilitate a proper decision on the merits.18 See
Stansfield v. Douglas County. 146 Wash. 2d 116, 123, 43 P.3d 498 (2002).
We need not disrupt our notice pleading regime in an effort to
accommodate defendants following the invocation of a CR 12(b)(2) affirmative
defense. In fact, accommodation has been made by rule. CR 12(d) permits any
party to seek an evidentiary hearing prior to trial when "lack of jurisdiction over
the person" has been raised as an affirmative defense pursuant to CR 12(b)(2):
"[Ujnless the court orders that the hearing and determination thereof be deferred
until the trial," "[t]he defenses specifically enumerated (1)-(7) in section (b) of this
rule . . . shall be heard and determined before trial on application of any party."
CR 12(d). Following an evidentiary hearing, the plaintiff's burden is no longer
that of a prima facie showing. Cf, FutureSelect, 175 Wash. App. at 885-86 ("when
18 For this reason, were we to accept the Companies' position, we would be compelled to
conclude that the trial court abused its discretion when it refused to permit the Attorney General
to conduct jurisdictional discovery.
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a motion to dismiss for lack of personal jurisdiction is resolved without an
evidentiary hearing," the plaintiff's burden is only that of a prima facie showing).
In spite of this accommodation, it is apparent, given the Companies'
litigation strategy—for instance, their opposition to the Attorney General's request
that he be allowed to participate in general and jurisdictional discovery—that their
objective has been to avoid engaging in discovery. While not unusual or
inherently problematic, this objective—when pursued in a manner antithetical to
the purpose of notice pleading and the structure of the Civil Rules—must be
rebuffed. Accordingly, we decline to countenance the submittal of sworn
testimony as a means of compelling plaintiffs to substantiate their allegations at
the pleadings stage. Because the allegations in the complaint are treated as
established, when a CR 12(b)(2) motion is made prior to full discovery, any
individual allegation cannot be defeated by a statement to the contrary in a
declaration submitted in support of the motion to dismiss.19
With this articulation of the proper standard of review accomplished, we
proceed to set forth and examine in some detail the legal principles pertinent to
the due process analysis conducted herein.
B
The Attorney General asserts specific personal jurisdiction over the
Companies pursuant to RCW 19.86.160—the long-arm provision of the CPA:
19 The effect of our decision is not to mandate that affidavits or declarations submitted in
support of a motion to dismiss be henceforth stricken. We hold only that such submissions do not
alter the manner in which we treat the allegations in the complaint.
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Personal service of any process in an action under this chapter
may be made upon any person outside the state if such person has
engaged in conduct in violation of this chapter which has had the
impact in this state which this chapter reprehends. Such persons
shall be deemed to have thereby submitted themselves to the
jurisdiction of the courts of this state within the meaning of RCW
4.28.180 and 4.28.185.
This provision "extends the jurisdiction of Washington courts to persons
outside its borders" and "'is intended to operate to the fullest extent permitted by
due process.'" AU Optronics, 180 Wash. App. at 914 (quoting In re Marriage of
David-Ovtan. 171 Wn App 781. 798. 288 P.3d 57 (2012). review denied. 177
Wash. 2d 1017 (2013)). Our "exercise of jurisdiction under RCW 19.86.160 must
satisfy both the statute's requirements and due process." AU Optronics, 180Wn.
App. at 914. The Companies limit their jurisdictional challenge to the State's
alleged attempt to violate due process.
A framework for analyzing whether Washington courts may exercise
personal jurisdiction consistent with the Due Process Clause—derived from
certain United States Supreme Court decisions discussed infra—has emerged.
(1) That purposeful "minimum contacts" exist between the
defendant and the forum state; (2) that the plaintiff's injuries "arise
out of or relate to" those minimum contacts; and (3) that the
exercise of jurisdiction be reasonable, that is, that jurisdiction be
consistent with notions of "fair play and substantial justice."
Grange Ins. Ass'n v. State, 110 Wash. 2d 752, 758, 757 P.2d 933 (1988) (citing
Burger King Corp. v. Rudzewicz. 471 U.S. 462, 472-78, 105 S. Ct. 2174, 85 L
Ed. 2d 528 (1985)); accord Failla v. FixtureOne Corp., Wn.2d , 336 P.3d
1112, 1116(2014): FutureSelect, 180Wn.2d at 963-64: AU Optronics, 180 Wn.
App. at 914.
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While this framework may serve as a useful analytical tool, given its
derivation, its value is dependent upon ascertaining the manner in which the
United States Supreme Court has applied the principles embodied therein. In
recognition of this, we turn our attention to the United States Supreme Court's
personal jurisdiction jurisprudence.
"The Due Process Clause of the Fourteenth Amendment constrains a
State's authority to bind a nonresident defendant to a judgment of its courts."
Walden. 134 S. Ct. at 1121. "The canonical opinion in this area remains
International Shoe Co. v. Washington. 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95
(1945), in which [the United States Supreme Court] held that a State may
authorize its courts to exercise personal jurisdiction over an out-of-state
defendant if the defendant has "certain minimum contacts with [the State] such
that the maintenance of the suit does not offend traditional notions of fair play
and substantial justice. Daimler AG v. Bauman, _ U.S. _, 134 S. Ct. 746,
754, 187 L. Ed. 2d 624 (2014) (internal quotation marks omitted) (quoting
Goodyear Dunlop Tires Operations. S.A. v. Brown, U.S. , 131 S. Ct. 2846,
2853, 180 L. Ed. 2d 796 (2011)). "International Shoe's conception of 'fair play
and substantial justice' presaged the development of two categories of personal
jurisdiction," commonly referred to as "specific jurisdiction" and "general
jurisdiction." Daimler, 134 S. Ct. at 754. Specific jurisdiction, which since "'has
become the centerpiece of modern jurisdictional theory,'" requires that suit arise
out of or relate to the defendant's contacts with the forum. Daimler, 134 S. Ct. at
754-55 (quoting Goodyear. 131 S. Ct. at 2854). General jurisdiction, which since
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"'[has played] a reduced role,'" permits the exercise of personal jurisdiction over a
nonresident defendant where the defendant's "'continuous corporate operations
within a state [are] so substantial and of such a nature as to justify suit against it
on causes of action arising from dealings entirely distinct from those activities.'"
Daimler. 134 S. Ct. at 754-55 (alterations in original) (quoting Goodyear. 131 S.
Ct. at 2854; Int'l Shoe. 326 U.S. at 318).20
"'[T]he constitutional touchstone' of the determination whether an exercise
of personal jurisdiction comports with due process 'remains whether the
defendant purposefully established "minimum contacts" in the forum State.'"
Asahi Metal Indus. Co. v. Superior Court of Cal.. Solano County. 480 U.S. 102,
108-09, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987) (plurality opinion) (alteration in
original) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct.
2174, 85 L Ed. 2d 528 (1985)): accord Hanson v. Denckla, 357 U.S. 235, 253,
78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958). The minimum contacts "inquiry . . .
'focuses on "the relationship among the defendant, the forum, and the litigation.
Walden, 134 S. Ct. at 1121 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S.
770, 775, 104 S. Ct. 1473, 79 L. Ed. 2d 790 (1984)) (quoting Shaffer v. Heitner.
433 U.S. 186, 204, 97 S. Ct. 2569, 53 L Ed. 2d 683 (1977)): accord Failla v.
FixtureOne Corp.. Wn.2d , 336 P.3d 1112, 1116(2014). Indeed, "[d]ue
20 The United States Supreme Court has condemned the "'elid[ing]'" of '"the essential
difference[s]'" between specific and general jurisdiction, observing that"[although the placement
ofa product into the stream ofcommerce 'may bolster an affiliation germane to specific
jurisdiction,'. . . such contacts 'do not warrant a determination that, based on those ties, the
forum has general jurisdiction over a defendant.'" Daimler, 134 S. Ct. at 757 (quoting Goodyear,
131 S. Ct. at 2855, 2857). We are careful to note that our analysis herein is limited to
determining whether specific jurisdiction may be exercised overthe Companies.
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process requires that a defendant be haled into court in a forum State based on
his own affiliation with the State, not based on the 'random, fortuitous, or
attenuated' contacts he makes by interacting with other persons affiliated with the
State." Walden. 134 S. Ct. at 1123 (quoting Burger King. 471 U.S. at 475). In
view of this, "the foreseeability that is critical to due process analysis is not the
mere likelihood that a product will find its way into the forum," but, "[r]ather, it is
that the defendant's conduct and connection with the forum State are such that
he should reasonably anticipate being haled into court there." World-Wide
Volkswagen Corp. v. Woodson. 444 U.S. 286, 297, 100 S. Ct. 559, 62 L. Ed. 2d
490 (1980). Thus, it has been said that "[t]he forum State does not exceed its
powers under the Due Process Clause if it asserts personal jurisdiction over a
corporation that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the forum State."
World-Wide Volkswagen. 444 U.S. at 297-98 (emphasis added).
"The strictures of the Due Process Clause forbid a state court to exercise
personal jurisdiction . .. under circumstances that would offend '"traditional
notions of fair play and substantial justice."'" Asahi. 480 U.S. at 113 (quoting Int'l
Shoe. 326 U.S. at 316) (quoting Milliken v. Meyer. 311 U.S. 457, 463, 61 S. Ct.
339, 85 L. Ed. 278 (1940)). Thus, "[o]nce it has been decided that a defendant
purposefully established minimum contacts within the forum State, these
contacts may be considered in light of other factors to determine whether the
assertion of personal jurisdiction would comport with 'fair play and substantial
justice.'" Burger King. 471 U.S. at 476 (quoting Int'l Shoe. 326 U.S. at 320).
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"[M]inimum requirements inherent in the concept of 'fair play and substantial
justice' may defeat the reasonableness of jurisdiction even if the defendant has
purposefully engaged in forum activities." Burger King, 471 U.S. at 477-78.
"[C]ourts in 'appropriate case[s]' may evaluate 'the burden on the defendant,' 'the
forum State's interest in adjudicating the dispute,' 'the plaintiff's interest in
obtaining convenient and effective relief,' 'the interstate judicial system's interest
in obtaining the most efficient resolution of controversies,' and the 'shared
interest of the several States in furthering fundamental substantive social
policies.'" Burger King, 471 U.S. at 477 (second alteration in original) (quoting
World-Wide Volkswagen. 444 U.S. at 292).
In 2011, the United States Supreme Court revisited its personal
jurisdiction jurisprudence in the noteworthy case of J. Mclntvre Machinery. Ltd. v.
Nicastro. U.S. . 131 S. Ct. 2780, 180 L. Ed. 2d 765 (2011). Although the
decision failed to yield a majority opinion, Justice Breyer's concurring opinion,
which—as the opinion setting forth the narrowest ground of decision—represents
the Court's holding,21 expounded upon familiar, but often difficult to administer,
principles. Given that the decision is instructive in resolving the matter before us,
we examine it in some detail.
The facts in J. Mclntvre are relatively straightforward. A British
21 Because the Court's plurality opinion did not garner assent among at least five justices,
we must, in order to ascertain the Court's holding, determine whether the plurality opinion or the
concurrence decided the case on the narrowest grounds. See, ejj.. Marks v. United States. 430
U.S. 188, 193, 97 S. Ct. 990, 51 L. Ed. 2d 260 (1977). Consistent with our recent decision in AU
Optronics, we conclude that Justice Breyer's concurring opinion represents the more narrow
ground of decision and is, thus, the Court's holding. 180 Wash. App. at 919
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manufacturer sold metal shearing machines to a United States distributor, which,
in turn, marketed and sold the machines throughout the United States. 131 S.
Ct. at 2786 (plurality opinion). A single machine, which had been manufactured
in Britain, was sold by the United States distributor to a New Jersey company.22
J. Mclntvre. 131 S. Ct. at 2786 (plurality opinion). Thereafter, Robert Nicastro,
an employee of the New Jersey company, seriously injured his hand while using
the machine. J. Mclntvre. 131 S. Ct. at 2786 (plurality opinion). Nicastro
subsequently filed suit against the British manufacturer in New Jersey. J.
Mclntvre, 131 S. Ct. at 2786 (plurality opinion). The New Jersey Supreme Court
held that because the manufacturer knew or reasonably should have known "that
its products are distributed through a nationwide distribution system that might
lead to those products being sold in any of the fifty states," New Jersey courts
could, consistent with the Due Process Clause, exercise jurisdiction over the
manufacturer. Nicastro v. Mclntvre Mach. Am.. Ltd.. 201 N.J. 48, 76-78, 987
A.2d 575 (2010).
The United States Supreme Court reversed; however, the case produced
no majority opinion—four justices signed Justice Kennedy's plurality opinion, two
justices signed Justice Breyer's concurring opinion, and three justices signed
Justice Ginsburg's dissenting opinion. While the plurality opinion and the
concurring opinion relied on different reasoning, both reached the same
22 Whereas the plurality opinion stated that "no more than four machines ... ended up in
New Jersey," Justice Breyer's concurring opinion stated, "The American Distributor on one
occasion sold and shipped one machine to a New Jersey customer." J. Mclntvre, 131 S. Ct. at
2791. As explained herein, Justice Breyer's opinion controls and, thus, we presume that only one
machine entered New Jersey.
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conclusion: a foreign manufacturer's sale of its products through an independent,
nationwide distribution system is not sufficient, absent something more, for a
state to assert personal jurisdiction over the manufacturer when only one of its
products enters a state and causes injury in that state. Compare J. Mclntvre,
131 S. Ct. at 2791 (plurality opinion), with \± at 2892 (Breyer, J., concurring in
the judgment).
The plurality identified the appropriate inquiry as focusing on "the
defendant's actions, not his expectations." J. Mclntvre, 131 S. Ct. at 2789
(plurality opinion). The plurality required evidence that the foreign defendant
"targeted" the forum state in some fashion. J. Mclntvre, 131 S. Ct. at 2789-90
(plurality opinion). That it was simply foreseeable thatthe defendant's products
might be distributed in the forum state—or in all 50 states, for that matter—was
insufficient. J. Mclntvre, 131 S. Ct. at 2789-90 (plurality opinion). Therefore,
despite evidence that the British manufacturer had targeted the United States (by
virtue of utilizing a nationwide distributor), given that there was no evidence
showing that the manufacturer had targeted New Jersey specifically, the plurality
reasoned that New Jersey could not exercise personal jurisdiction over the
manufacturer. J. Mclntvre, 131 S. Ct. at 2790-91 (plurality opinion).
Justice Breyer concurred in the judgment, yet he voiced his disapproval of
the plurality's "strict rules that limit jurisdiction where a defendant does not
'inten[d] to submit to the power of a sovereign' and cannot 'be said to have
targeted the forum.'" J. Mclntvre, 131 S. Ct. at 2793 (Breyer, J., concurring in the
judgment) (alteration in original) (quoting ]± at 2788). Justice Breyer explained
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that because certain issues with "serious commercial consequences ... are
totally absent in this case," strict adherence to prior precedents "and the limited
facts found by the New Jersey Supreme Court" was the better approach. J.
Mclntvre. 131 S. Ct. at 2793-94 (Breyer, J., concurring in the judgment).
He also rejected the New Jersey Supreme Court's "absolute approach," in
which "a producer is subject to jurisdiction for a products-liability action so long
as it 'knows or reasonably should know that its products are distributed through a
nationwide distribution system that might lead to those products being sold in any
of the fifty states.'" J. Mclntvre, 131 S. Ct. at 2793 (Breyer, J., concurring in the
judgment) (quoting Nicastro, 201 N.J. at 76-77). He disavowed this formulation
as inconsistent with prior precedent.
For one thing, to adopt this view would abandon the
heretofore accepted inquiry of whether, focusing upon the
relationship between "the defendant, the forum, and the litigation," it
is fair, in light of the defendant's contacts with that forum, to subject
the defendant to suit there." Shaffer v. Heitner, 433 U.S. 186, 204
S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (emphasis added). It would
ordinarily rest jurisdiction instead upon no more than the
occurrence of a product-based accident in the forum State. But this
Court has rejected the notion that a defendant's amenability to suit
"travel[s] with the chattel." World-Wide Volkswagen, 444 U.S., at
296.
For another, I cannot reconcile so automatic a rule with the
constitutional demand for "minimum contacts" and "purposeful[l]
avail[ment]," each of which rest upon a particular notion of
defendant-focused fairness. ]p\, at 291, 297 (internal quotation
marks omitted). A rule like the New Jersey Supreme Court's would
permit every State to assert jurisdiction in a products-liability suit
against any domestic manufacturer who sells its products (made
anywhere in the United States) to a national distributor, no matter
how large or small the manufacturer, no matter how distant the
forum, and no matter how few the number of items that end up in
the particular forum at issue.
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J. Mclntvre. 131 S. Ct. at 2793 (Breyer, J., concurring in the judgment) (alteration
in original).
In Justice Breyer's estimation, "the outcome of this case is determined by
our precedents"—in particular, World-Wide Volkswagen. 444 U.S. 286, and
Asahi. 480 U.S. 102. J. Mclntvre. 131 S. Ct. at 2791-92 (Breyer, J., concurring in
the judgment). Justice Breyer explained that evidence of either a "'regular.. .
flow' or 'regular course' of sales"23 in the forum State or of "'something more,'
such as special state-related design, advertising, advice, marketing, or anything
else" was necessary in order to support New Jersey's assertion of jurisdiction. J.
Mclntvre. 131 S. Ct. at 2792 (Breyer, J., concurring in the judgment). Given the
absence of either, Justice Breyer concluded that there was no evidence showing
that the British manufacturer "'purposefully avail[ed] itself of the privilege of
conducting activities' within New Jersey, or that it delivered its goods in the
stream of commerce 'with the expectation that they [would] be purchased' by
New Jersey users." J. Mclntvre, 131 S. Ct. at 2792 (Breyer, J., concurring in the
judgment) (first alteration in original) (quoting World-Wide Volkswagen. 444 U.S.
at 297-98).
Justice Breyer did not offer a mathematically precise means of computing
the requisite incidence or volume of sales that must occur in a forum state in
order to constitute sufficient minimum contacts. Nonetheless, in seeking to
ascertain a threshold above which a certain incidence or volume of sales will
23 The phrases "'regular... flow' or 'regular course' of sales" originated from Justice
Brennan's and Justice Stevens's separate concurring opinions in Asahi. 480 U.S. at 117, 122.
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constitute a "regular flow" or "regular course," certain observations made by
Justice Breyer are revealing.
In rejecting the New Jersey Supreme Court's "absolute approach," as
irreconcilable "with the constitutional demand for 'minimum contacts' and
'purposefu[l] avail[ment],' each of which rest upon a particular notion of
defendant-focused fairness," Justice Breyer was troubled by the potential for a
small foreign manufacturer to be haled into court in a distant forum by virtue of a
large distributor's sale of a single product made by the manufacturer.
What might appear fair in the case of a large manufacturer which
specifically seeks, or expects, an equal-sized distributor to sell its
product in a distant State might seem unfair in the case of a small
manufacturer (say, an Appalachian potter) who sells his product
(cups and saucers) exclusively to a large distributor, who resells a
single item (a coffee mug) to a buyer from a distant State
(Hawaii). . . .
It may be that a larger firm can readily "alleviate the risk of
burdensome litigation by procuring insurance, passing the expected
costs on to consumers, or, if the risks are too great, severing its
connection with the State." World-Wide Volkswagen, supra, at 297.
But manufacturers come in many shapes and sizes. It may be
fundamentally unfair to require a small Egyptian shirt maker, a
Brazilian manufacturing cooperative, or a Kenyan coffee farmer,
selling its products through international distributors, to respond to
products-liability tort suits in virtually every State in the United
States, even those in respect to which the foreign firm has no
connection at all but the sale of a single (allegedly defective) good.
J. Mclntvre, 131 S. Ct. at 2793-94 (Breyer, J., concurring in the judgment).
The above-quoted passage, considered in concert with Justice Breyer's
application ofWorld-Wide Volkswagen and Asahi, leads to an inference that the
minimum contacts inquiry, as viewed by Justice Breyer, seeks to determine
whether the incidence or volume of sales into a forum signifies something
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systematic—informed by either the purpose or the expectation of the foreign
manufacturer—such that it is fair, in light of the relationship between the
defendant, the forum, and the litigation, to subject the foreign defendant to
personal jurisdiction in the forum. Stated differently, if the incidence or volume of
sales into a forum points to something systematic—as opposed to anomalous—
then "purposeful availment" will be found.24'25
C
This court's prior interpretation of J. Mclntvre is consistent with the
foregoing assessment. Recently, in AU Optronics, we were given occasion to
interpret and apply J. Mclntvre in a factual context similar to the one presented
by this appeal. In AU Optronics, the Attorney General of Washington brought
suit against 20 defendants, including a foreign corporation that successfully
moved, on its own behalf, to dismiss the complaint for lack of personal
jurisdiction. 180 Wash. App. at 908, 911-12. In asserting personal jurisdiction over
24 The presence of state-related design, advertising, advice marketing, or anything else
that could fall within that which has been described as "something more," will inform the foregoing
inquiry and, in some instances, may be sufficient to sustain the exercise of personal jurisdiction.
25 Justice Ginsburg's dissenting opinion, which was joined by Justices Sotomayor and
Kagan, reasoned that the manufacturer—by virtue of"engag[ing] a U.S. company to promote and
distribute the manufacturer's products, not in any particular State, but anywhere and everywhere
in the United States the distributorcan attract purchasers"—had purposefully availed itselfof the
privilege ofconducting business in all states, including New Jersey. J. Mclntvre, 131 S. Ct. at
2799, 2801 (Ginsburg, J., dissenting). From this reasoning it may be inferred that, even in the
absence of a substantial volume of sales into a forum state, Justices Ginsburg, Sotomayor, and
Kagan would still find purposeful availment in the event that a foreign manufacturer targeted a
national market. It may be further deduced that the three dissenting justices in J. Mclntvre would
be at least as amenable as the two concurring justices, if not more so, to the notion that
purposeful availment is satisfied when a plaintiff allegesthat a foreign manufacturer, in targeting a
national market, intended or expected that its products would be sold in one of the several states,
and that such products were, in fact, sold into the forum state in substantial volume. Thus, any
case in which the facts satisfied the demands of the two concurring justices would also satisfy the
demands of the three dissenting justices, resulting in a majority decision, if not a unified majority
view.
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the foreign corporation, the Attorney General alleged that it had, in violation of
the CPA, manufactured and distributed LCD panels as component parts for retail
consumer goods, which were then sold by third parties in high volume throughout
the United States, including in Washington. AU Optronics. 180 Wash. App. at 908-
09.
After closely examining J. Mclntvre. we held that the foreign
manufacturer's alleged violation of the CPA "plus a large volume of expected and
actual sales established sufficient minimum contacts for a Washington court to
exercise specific jurisdiction over it." AU Optronics. 180 Wash. App. at 924. In so
holding, we emphasized the fact that the foreign manufacturer "understood the
third parties would sell products containing its LCD panels throughout the United
States, including large numbers of those products in Washington." AU Optronics.
180 Wash. App. at 924. This was apparent, in part, by virtue of the fact that the
foreign manufacturer "sold its LCD panels to a particular global consumer
electronics manufacturer that sold products containing these panels nationwide
and in Washington through national electronic appliance distribution chains." AU
Optronics, 180 Wash. App. at 924.
While acknowledging that "'nationwide distribution of a foreign
manufacturer's products is not sufficient to establish jurisdiction over the
manufacturer when that effort results in only a single sale in the forum state,'" we
concluded that "the record here shows that during the conspiracy period, various
companies and retailers sold millions of dollars' worth of products containing [the
foreign manufacturer's] LCD panels in Washington." AU Optronics. 180 Wn.
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App. at 924-25 (quoting Willemsen v. Invacare Corp.. 352 Or. 191, 203, 282 P.3d
867 (2012), cert, denied. 133 S. Ct. 984 (2013)). Consequently, as alleged
"[s]ales to Washington consumers were not isolated; rather, they indicated a
'"regular. . . flow'" or '"regular course"' of sales in Washington."26 AU Optronics,
180 Wash. App. at 925 (quoting J. Mclntvre. 131 S. Ct. at 2792).
Our decision in AU Optronics was based on the analysis of J. Mclntvre
adopted by the Oregon Supreme Court in Willemsen v. Invacare Corporation,
352 Or. 191. AU Optronics, 180 Wash. App. at 922.27 In Willemsen, a Taiwanese
manufacturer of battery chargers, CTE, supplied its products for installation in
motorized wheelchairs that were built by an Ohio corporation, Invacare. 352 Or.
at 194. Invacare then sold the wheelchairs throughout the United States,
including in Oregon. Willemsen. 352 Or. at 194. In Oregon, between 2006 and
2007, Invacare sold 1,166 motorized wheelchairs, nearly all of which came
equipped with CTE's battery chargers. Willemsen, 352 Or. at 196. After their
mother died in a fire, which was allegedly caused by a defect in CTE's battery
charger, the plaintiffs filed suit against CTE in Oregon. Willemsen, 352 Or. at
194.
26 In dicta, we observed that the foreign manufacturer "also entered into a master
purchase agreement" with another company "in which the company agreed to obtain and
maintain all necessary U.S. regulatory approval." AU Optronics, 180 Wash. App. at 924. We also
noted that representatives of the foreign manufacturer "met with various companies in
Washington and in other states." AU Optronics, 180 Wash. App. at 924. While it is possible that
these circumstances alone could have been sufficient to satisfy due process, they were not, in
that instance, necessary to do so.
27 In response to the foreign manufacturer's contention that Willemsen's reasoning
conflicted with our Supreme Court's decision in Grange Ins. Ass'n v. State, 110 Wash. 2d 752, we
explained that the analysis in Willemsen was based upon Justice Breyer's concurring opinion in J.
Mclntvre, and that Grange "predates the United States Supreme Court's more recent
interpretations of the federal due process clause." AU Optronics, 180 Wash. App. at 925.
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Relying on Justice Breyer's concurrence in J. Mclntvre. the Oregon
Supreme Court determined, "The sale of the CTE battery charger in Oregon that
led to the death of plaintiffs' mother was not an isolated or fortuitous occurrence."
Willemsen. 352 Or. at 203. Given that "the sale of over 1,100 CTE battery
chargers within Oregon over a two-year period shows a '"regular.. . flow'" or
'"regular course'" of sales in Oregon," the court held that sufficient minimum
contacts existed to exercise specific jurisdiction over CTE. Willemsen, 352 Or. at
203-04 (internal quotation marks omitted) (quoting J. Mclntvre, 131 S. Ct. at
2792 (Breyer, J., concurring in the judgment)). "Put differently, the pattern of
sales of CTE's battery chargers in Oregon establishes a 'relationship between
"the defendant, the forum, and the litigation," [such that] it is fair, in light of the
defendant's contacts with [this] forum, to subject the defendant to suit [h]ere.'"
Willemsen, 352 Or. at 207 (alterations in original) (quoting J. Mclntvre. 131 S. Ct.
at 2793 (Breyer, J., concurring in the judgment) (quoting Shaffer. 433 U.S. at
204).
Having set forth in some detail the precedents upon which we rely in
resolving this matter, we now apply them to the facts herein.
D
The Attorney General contends that Washington's exercise of jurisdiction
over the Companies is consistent with due process. This is so, he asserts,
because (1) the large volume of CRT products that entered Washington
constituted a regular flow or regular course of sales, (2) the Attorney General's
claims arose from the Companies' contacts with Washington because consumers
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were injured by paying inflated prices as a result of the Companies' price-fixing,
and (3) the concern for otherwise remediless consumers and the danger of
insulating foreign manufacturers from the reach of Washington antitrust laws
outweigh any inconvenience to the Companies. We agree.
"Although '[t]o be sure, nationwide distribution of a foreign manufacturer's
products is not sufficient to establish jurisdiction over the manufacturer when that
effort results in only a single sale in the forum state,'" the presence of "a large
volume of expected and actual sales" establishes sufficient minimum contacts to
support the exercise ofjurisdiction. AU Optronics, 180 Wash. App. at 924 (quoting
Willemsen, 352 Or. at 203). While the facts in this case differ from those in 1
Mclntvre—as well as the precedents upon which Justice Breyer relied—the
reasoning set forth in his opinion therein nevertheless dictates the outcome in
this matter.
As alleged, the defendants, together, exercised hegemony over a
prodigious industry responsible for manufacturing and supplying critical
component parts to be integrated into consumer technology products, which
were ubiquitous in North America during the turn ofthe century. The defendants
understood that third parties would sell products containing their CRT component
parts throughout the United States, including large numbers ofthose products in
Washington. Their actions were intended to and did, in fact, result in
"substantial" harm to "a large number of Washington State agencies and
residents."
Applying the teachings of Justice Breyer in J. Mclntvre. we conclude that
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the Companies, by virtue of the substantial volume of sales that took place in
Washington, "purposefully availed" themselves of the privilege of conducting
activities within Washington. A reasonable inference to be drawn from the
Attorney General's allegations, which we treat as verities at this stage of the
litigation, is that a "regular flow" or "regular course" of sales into Washington
during the conspiracy period did, in fact, occur. The presence, in large quantity,
of the defendants' products in Washington demonstrates that their contacts were
not random, fortuitous, or attenuated. Instead, they point to a systematic effort
by the defendants to avail themselves of the privilege of conducting business in
Washington. Thus, Justice Breyer's concern of a small foreign manufacturer
being haled into court based on an anomalous sale of one of its products by a
large distributor is not implicated herein. In view of the foregoing, we conclude
that the Companies purposefully established minimum contacts with
Washington.28
"Due process also requires the [Attorney General] to show this cause of
action arises from [the Companies'] indirect sales to Washington consumers."
AU Optronics, 180 Wash. App. at 925. The Attorney General claims that, as a
result of the defendants' price-fixing conduct, Washington State agencies and
residents paid supracompetitive prices for CRT products, which resulted in injury
to them. The Companies argue that consumers purchased CRT products from
independent third parties. We rejected a similar argument in AU Optronics, 180
28 As indicated, supra at n.24, while the presence of "something more" may be sufficient,
under certain circumstances, to establish "purposeful availment," it is not necessary where, as
here, a substantial volume of sales occurred in the forum.
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Wn. App. at 925, and do so here.
While we conclude that the Attorney General has sufficiently alleged both
that the Companies "purposefully availed" themselves of the privilege of doing
business in Washington and that his cause of action "arises from" their indirect
sales to Washington consumers, we must still determine whether the exercise of
personal jurisdiction would offend traditional notions of fair play and substantial
justice. See Asahi, 480 U.S. at 113. We have "considered] 'the quality, nature,
and extent of the defendant's activity in Washington, the relative convenience of
the plaintiff and the defendant in maintaining the action here, the benefits and
protection of Washington's laws afforded the parties, and the basic equities of the
situation.'" AU Optronics, 180 Wash. App. at 926 (quoting CTVCof Haw., 82 Wn.
App. at 720).
The Attorney General alleged that the defendants manufactured, sold,
and/or distributed millions of CRTs and CRT products to customers throughout
the United States and in Washington during the conspiracy period. He alleged
that the actions of the defendants were intended to and did have a direct,
substantial, and reasonably foreseeable effect on import trade and commerce
into and within Washington.
Although it may be inconvenient for the Companies to defend in
Washington, this inconvenience does not outweigh the strong interest that
Washington has in providing a forum in which recovery on behalf of indirect
purchasers may be pursued. See AU Optronics, 180Wn. App. at 927 (given that
indirect purchasers in Washington have no private right of action, the benefits
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and protections of Washington law favor the exercise of jurisdiction). Nor does
any inconvenience outweigh the inequitable result that would occur if the
Companies were insulated from liability simply because other defendants could
provide sources of compensation. See AU Optronics, 180 Wash. App. at 928
("Considering modern economic structures, it is unreasonable to expect that [a
foreign manufacturer] would target Washington consumers directly.")
We hold that requiring the Companies to appear and defend in
Washington does not offend traditional notions offair play and substantial justice.
The Attorney General's allegations were sufficient to withstand the Companies'
dispositive CR 12(b)(2) motions and, thus, the trial court erred by dismissing the
Attorney General's complaint against them.
Ill
The Companies seek to recover attorney fees on appeal. The Attorney
General seeks reversal of the attorney fees awarded to the Companies in the trial
court. Given that the Companies are no longer "prevailing parties," we reverse
the award of fees in the trial court and decline to award fees on appeal.
Reversed and remanded.
We concur:
)£^/a/\
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