Williams v. Yamaha Motor Corp., 851 F.3d 1015 (9th Cir. 2017) [click for opinion]
Plaintiff-Appellants, purchasers of boats containing certain outboard motors, brought suit against Yamaha Motor Co. Ltd ("YMC"), a Japanese company, and its subsidiary, Yamaha Motor Corporation, U.S.A. ("YMUS"), in California. Plaintiff-Appellants alleged that a design defect in the motors caused premature corrosion in their dry exhaust systems and posed an unreasonable safety hazard. The district court dismissed the claims against YMC for lack of personal jurisdiction.
The Ninth Circuit affirmed the district court's decision. First, the court determined that it did not have general jurisdiction over YMC under the 2014 Supreme Court case Daimler AG v. Bauman, which held that the test for general jurisdiction is whether a corporation is essentially "at home" in the forum state. YMC, which is incorporated and has its principal place of business in Japan, and has no offices or employees in California, did not have sufficient contacts with California to meet this test. In reaching its conclusion, the court noted that in 2012, net sales in North America accounted for only roughly 17% of YMC's total net sales.
Alternatively, Plaintiff-Appellants argued that YMUS's contacts should be imputed to YMC for the purpose of establishing jurisdiction, because YMUS operated as YMC's "alter ego." The court concluded that Plaintiff-Appellants had not alleged sufficient facts to determine that YMUS was YMC's alter ego, and even if it had, such a finding, on its own, would not necessarily establish general jurisdiction under Daimler.
Moving on to specific jurisdiction, the court considered whether YMC had "purposefully directed" actions at California. YMC had not, because it neither conducted activities within the state of California nor targeted California via marketing and advertising.
Because the only connection between YMC and California was YMUS, the court next considered whether YMUS's connections to California could be attributed to YMC under an agency theory. Under Daimler, an agency relationship cannot be used to establish general jurisdiction. However, the Daimler court stated that agency relationships may remain relevant to the existence of specific jurisdiction, leaving this an open question for the court.
The court was reluctant to find that an agency relationship could establish specific jurisdiction. The Ninth Circuit's agency analysis focuses on whether a subsidiary "performs services that are sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation's own officials would undertake to perform substantially similar services." The Daimler court had, however, already determined that this test, in the general jurisdiction context, necessarily "stacks the deck" in favor of finding jurisdiction by consistently leading to a pro-jurisdiction determination. The Ninth Circuit found that Daimler's criticism of this test also applied in the context of specific jurisdiction.
Yet even if some standard of agency theory remains relevant to a specific jurisdiction determination under Daimler, the court held that Plaintiff-Appellants had not made out a prima facie case for an agency relationship because they had not alleged the requisite control of YMC over YMUS's activities.