Daily Blast May 21, 2013

On May 21, 2013, the California Court of Appeal, Third Appellate District (Sacramento) issued an opinion in Bombardier Recreational Products v. Dow Chemical Canada ULC(May 21, 2013, C065603) __ Cal.App.4th __, analyzing whether a defendant’s knowledge that its product will eventually enter the stream of commerce in California is sufficient to establish personal jurisdiction. (Slip opn., p. 4.) The Court of Appeal held that mere foreseeability—at least where a product is not sold in a state as part of the regular and anticipated flow of commerce into that state—is insufficient to establish minimum contacts with the forum state. (Id. at p. 6.)

Plaintiff sued Bombardier for personal injuries he sustained when he attempted to start a Sea-Doo personal watercraft manufactured by Bombardier and it caught on fire. (Slip opn., p. 2.) Bombardier cross-complained against Dow Chemical Canada ULC (“Dow Canada”), a successor of the company that manufactured the fuel tanks installed by Bombardier in its watercrafts. (Ibid.) Dow Canada moved to quash service of summons for lack of personal jurisdiction. It contended its predecessor lacked sufficient contacts with California because the fuel tanks were manufactured exclusively in Canada. Dow Canada and its predecessor did not have a registered agent in California. They were never qualified to do business in California and never manufactured products in California. In addition, they did not have employees, offices, or facilities in California. They also did not advertise or sell fuel tanks or fuel tank filler necks in California. (Ibid.) Bombardier argued that Dow Chemical had sufficient contacts with California because its predecessor knew Bombardier would incorporate its fuel tank and fuel tank filler necks in watercrafts it intended to sell in the United States, including California. The trial court disagreed and granted the motion to quash. The court determined that Dow Canada lacked minimum contacts with the state. (Ibid.)

The Court of Appeal affirmed and held that a court may exercise specific jurisdiction over a nonresident defendant only if (1) the defendant has purposefully availed himself of forum benefits; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice. (Slip opn., p. 5.) The court noted that the plurality and concurring opinions in citing J. McIntyre Machinery, Ltd. V. Nicastro (2011) 546 U.S. ___, ___ could not agree on the extent to which a foreign defendant’s foreseeability could establish minimum contacts. According to the Bombardier court, mere foreseeability is insufficient to establish minimum contacts. Rather, the existence of jurisdiction is determined based upon an individualized assessment of the facts. (Slip opn., p. 6.) The purposeful availment prong is satisfied only 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. (Id. at p. 12.) Therefore, since Dow Chemical and its predecessors did not purposefully direct their activities toward California residents, they did not have a substantial connection with California. (Id. at pp. 12-13.) As a result, the Court of Appeal affirmed the trial court’s order to quash the service of summons for lack of personal jurisdiction.

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