Buckeye Boiler Co. v. Superior Court of Los Angeles County

• Court: United States State Supreme Court (California)
• Writing for the Court: PETERS; TRAYNOR
• Citation: 71 Cal.2d 893,80 Cal.Rptr. 113
• Parties: , 458 P.2d 57 BUCKEYE BOILER COMPANY, Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; Wayman P. FLYNT, Real Party in Interest. L.A. 29634.
• Decision Date: 28 August 1969

Page 113

80 Cal.Rptr. 113 71 Cal.2d 893, 458 P.2d 57 BUCKEYE BOILER COMPANY, Petitioner,
v.
The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;
Wayman P. FLYNT, Real Party in Interest. L.A. 29634. Supreme Court of California,
In Bank. Aug. 28, 1969.

Page 116

[458 P.2d 60] [71 Cal.2d 895] Murchison, Cumming, Baker & Velpmen and Ronald R. McQuoid, Los Angeles, for petitioner.

No appearance for respondent.

Margolis & McTernan, John T. McTernan, James L. Larson and Ben Margolis, Los Angeles, for real party in interest.

PETERS, Justice.

Petitioner, The Buckeye Boiler Company, seeks a writ of mandate to compel the respondent superior [71 Cal.2d 896] court to quash the service of summons upon it in an action for personal injuries brought by real party in interest Wayman P. Flynt. Involved is the scope of jurisdiction of California courts over foreign corporations claimed to be 'doing business in this state.' (Code Civ.Proc. § 411, subd. 2.)

The record shows that on or about March 15, 1967, while acting in the course of his employment at the General Electric Company's plant in Ontario, California, plaintiff was injured by the explosion of a pressure tank containing an unidentified liquid and being used in connection with a system for the spraying of liquid under air pressure. The tank, it is alleged, bore a metal name plate with the legend: 'The Buckeye Boiler Company, Dayton, Ohio. Built 1960--150 1bs, maximum;' and was, according to the record, being put to a use for which it was intended when manufactured. While receiving treatment in a California hospital for his injuries resulting from the explosion, plaintiff it is claimed suffered a fall, after which he was stricken with left hemiplegia, that is, total paralysis of his entire left side.

Plaintiff sued Buckeye, alleging inter alia negligent manufacture of the pressure vessel, manufacturer's strict liability, and breach of warranty. By amended complaint, plaintiff joined as defendants the doctor by which and the hospital in which he was treated for his injuries (hereinafter 'medical defendants'), alleging that the fall he suffered resulted from their negligence, and further alleging that he is in doubt whether his hemiplegic condition resulted from the explosion, the negligence of the doctor and hospital, or both.

Service of process upon Buckeye was effected by personal delivery to the Secretary of State, pursuant to section 411, subdivision 2, of the Code of Civil Procedure. Buckeye appeared specially (Code Civ.Proc. § 416.3) and moved to quash the service of summons on the ground that it was not doing business in the State of California and therefore could not properly be served with process pursuant to section 411, subdivision 2. The motion was denied. ¹

The medical defendants consist of a California corporation and an individual who is a California resident, both of whom allegedly cannot be sued in any other state on plaintiff's [71 Cal.2d 897] asserted causes of action. All witnesses of the accident reside in California.

Buckeye is a foreign corporation, organized and existing under the laws of the State of Ohio, with its principal place of business and principal offices in Dayton, Ohio. It manufactures pressure vessels which have numerous and varied uses. Sales are solicited outside Ohio in interstate commerce both directly and through independent manufacturers' representatives who sell Buckeye's products on a commission basis in Ohio, Kentucky, Michigan, Indiana, Pennsylvania, New Jersey, New York, Connecticut, Maryland, Delaware, North Carolina, South Carolina, West

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[458 P.2d 61] Virginia, Virginia, Georgia, Florida, and Alabama. Buckeye does not advertise its products.

Buckeye has no agent, office, sales representative, exclusive agency or exclusive sales outlet, warehouse, stock of merchandise, property, or bank account in California. It does not sell on consignment to, and has no commission agreement with, any person or entity in California. However, for a period of five years prior to plaintiff's injury, and continuing to the present, Buckeye has sold pressure tanks to Cochin Manufacturing Company, an Ohio corporation, which maintains a manufacturing plant in South San Francisco, California. Cochin orders some tanks directly from that plant; the purchases of other tanks are negotiated through its Ohio office. Buckeye ships the tanks (priced at $55 to $60 each) directly to the Cochin plant in South San Francisco. Annual gross sales to Cochin during the last two or three years have ranged from $25,000 to $35,000. Cochin manufactures hydraulic automobile lifts for service stations; it incorporates the tanks purchased from Buckeye into these lifts and then sells the lifts to purchasers throughout California and in other states. Cochin apparently does not resell Buckeye's tanks for other uses.

Buckeye claims that other than sales to Cochin it has had 'no contact with anyone in the State of California' and that it has not sold any of its products to the General Electric Company between January 1960 and the present. However, Buckeye admits that it has no records of its sales prior to 1962.

Buckeye ships to the Cochin plant in South San Francisco tanks identified in its invoices as 'Hydraulic Oil Tanks' which are generally 14 inches in diameter and 75 inches in height. Apparently the exploding tank which allegedly injured plaintiff was approximately 10 inches in diameter and [71 Cal.2d 898] 16 inches in height. There is no evidence in the record before us, other than the evidence of size and general type of use, to indicate what significant differences there may be between the tanks purchased by Cochin and the tank which allegedly injured plaintiff. ²

Plaintiff is unable to establish where his employer purchased the exploding tank. The chief of the purchasing department at General Electric's Ontario, California, plant testified that the company has no record of purchasing the tank in question, or any other item, from Buckeye. He also testified that the department destroys records more than five years old. However, he stated that it was the department's policy to purchase equipment, whenever possible, from suppliers located within the State of California.

Section 411, subdivision 2, of the Code of Civil Procedure authorizes service of process on foreign corporations 'doing business in this state.' This section exerts the full power of the state, consistent with the due process clause, to subject foreign corporations to the jurisdiction of California courts. (Fisher Governor Co. v. Superior Court, 53 Cal.2d 222, 224, 1 Cal.Rptr. 1, 347 P.2d 1.) Thus, in a case such as the present one where a foreign corporation contends that service of process upon it is not authorized by section 411, we must determine 'whether jurisdiction may constitutionally be assumed.' (Id., at p. 225, 1 Cal.Rptr. at p. 3, 347 P.2d at p. 3.)

A defendant not literally 'present' in the forum state may not be required to defend itself in that state's tribunals unless the 'quality and nature of the defendant's activity' in relation to the particular cause of action makes it fair to do so. (Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283; McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Henry R. Jahn & Son v. Superior Court, 49 Cal.2d 855, 860, 323 P.2d 437.) Such a defendant's activity must consist of 'an act done

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[458 P.2d 62] or transaction consummated in the forum State' or 'some (other) act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.' (Hanson v. Denckla, Supra, 357 U.S. at pp. 251, 253, 78 S.Ct. at pp. 1238, 1240.) Furthermore, unless the defendant's forum-related activity reaches such extensive [71 Cal.2d 899] or wide-ranging proportions as to make the defendant sufficiently 'present' in the forum state to support jurisdiction over it concerning causes of action which are unrelated to that activity (Fisher Governor Co. v. Superior Court, Supra, 53 Cal.2d 222, 225, 1 Cal.Rptr. 1, 347 P.2d 1, and authorities cited therein), the particular cause of action must arise out of or be connected with the defendant's forum-related activity. (McGee v. International Life Ins. Co., Supra, 355 U.S. 220, 223, 78 S.Ct. 199; International Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95.)

Once it is established that the defendant has engaged in activity of the requisite quality and nature in the forum state and that the cause of action is sufficiently connected with this activity, the propriety of an assumption of jurisdiction depends upon a balancing of the inconvenience to the defendant in having to defend itself in the forum state against both the interest of the plaintiff in suing locally and the interrelated interest of the state in assuming jurisdiction. (McGee v. International Life Ins. Co., Supra, 355 U.S. 220, 223, 78 S.Ct. 199; Fisher Governor Co. v. Superior Court, Supra, 53 Cal.2d 222, 225--226, 1 Cal.Rptr. 1, 347 P.2d 1.) In other words, one the threshold of sufficient activity by the defendant has been passed, the question of the propriety of subjecting the defendant to the jurisdiction of the forum involves both a consideration of fairness to the plaintiff (see Phillips v. Anchor Hocking Glass Corporation (1966) 100 Ariz. 251, 413 P.2d 732, 19 A.L.R.3d 1, 7) and a determination of whether, from a standpoint of the logical and orderly distribution of interstate litigation, the forum state is what Professor Ehrenzweig has termed a 'forum conveniens.' (See Ehrenzweig, The Transient Rule of Personal Jurisdiction: The 'Power' Myth and Forum Conveniens (1956) 65 Yale L.J. 289, 312; see generally, von Mehren and Trautman, Jurisdiction to Adjudicate: A Suggested Analysis (1966) 79 Harv.L.Rev. 1121.)

The forum state, of course, has an interest...