Williams v. Yamaha Motor Corporation, 9th Cir., 3/24/17
Yamaha Motor Co. Ltd. (YMC) is a Japanese company that makes boat motors that are sold around the world, including in California. The motors are imported through it wholly owned subsidiary, Yamaha Motor Corporation U.S.A (YMUS). Plaintiffs filed a class action in California district court against YMC and YMUS, alleging that the motors they bought were defective in violation of federal and state warranty claims. YMC filed a motion to dismiss for lack of personal jurisdiction — it has no offices or employees in California; YMUS filed successive 12(b)(6) motions to dismiss, arguing that Plaintiffs’ warranty claims weren’t plausible. In its final stage, the class action covered plaintiffs from five different states. The trial court ultimately granted all motions to all claims and dismissed the entire case with prejudice. Held: Affirmed.
Plaintiffs arguments that the court had general and specific jurisdiction over YMC both failed. Per Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), courts have general jurisdiction over a foreign corporation only if the corporation’s connections to the forum state are so ‘continuous and systematic’ as to render it essentially at home in the forum State. This generally (though not always) means that the defendant must be incorporated or have its principal place of business in the forum state; continuous contact by itself is not enough. Using principles set out in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the Ninth Cir. rejected plaintiffs argument that YMUS’s (subsidiary) contacts could be imputed to YMC (parent) for purposes of establishing general jurisdiction, even if the those contacts could in fact be imputed to its parent. If the rule were otherwise, it could render a foreign corporation subject to general jurisdiction wherever its subsidiary engages in a substantial, systematic and continuous course of business. Finally, while 17% of YMC worldwide sales were in California, that didn’t render it “at home” in California.
There was also no specific jurisdiction. Finding specific jurisdiction must conform to traditional notions of fair play and substantial justice, and defendant’s suit-related conduct must create “a substantial connection with the forum state.” The contacts must be created by the defendant itself (e.g., purposefully avails itself of the forum’s laws) and must be with the state itself, not just with people who reside there.
In Daimler, the U.S. Supreme Court left open whether agency principles could be used to support specific (as opposed to general) jurisdiction. But given the logic of the holding in Daimler, the Ninth Cir. seriously questioned (without actually killing forever) the notion that agency is sufficient to establish specific jurisdiction. The court also noted that even if the existence of an agency relationship was still relevant to the issue of specific jurisdiction, plaintiffs failed to make out a prima facie case in support of agency — Agency turns on control and plaintiffs failed to plead or show how YMC had the right to control YMUS in any manner at all.
The attorneys for Yamaha, Gibson Dunn, also took out the warranty claims against YMUS: Plaintiffs alleged that the subject engines corroded in a way that significantly reduced their life expectancy. All engines have a life expectancy. In their 12(b)(6) motion, YMUS argued that the notion that a reduced life expectancy made engines an “unreasonable safety hazard” (an element of a warranty claim) was not plausible under the pleading standards of Twombly. The Ninth Cir. agreed.
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