In re Automobile Antitrust Cases I and II

• Decision Date: 22 December 2005
• Docket Number: No. A109805.,A109805.
• Citation: 37 Cal.Rptr.3d 258,135 Cal.App.4th 100
• Court: California Court of Appeals Court of Appeals
• Parties: In re AUTOMOBILE ANTITRUST CASES I AND II.

37 Cal.Rptr.3d 258

135 Cal.App.4th 100

In re AUTOMOBILE ANTITRUST CASES I AND II.

No. A109805.

Court of Appeal, First District, Division Four.

December 22, 2005.

Certified For Partial Publication.^*

Zelle, Hofmann, Voelbel Mason & Gette, Craig C. Corbitt, Judith A. Zahid, Furth Firm, Michael P. Lehmann, Christopher L. Lebsock, San Francisco, for appellants.

Gibson, Dunn & Crutcher, Peter Sullivan, Douglas B. Miner, Raminta A. Rudys, Joel Sanders, San Francisco, for Nissan Motor Ltd.

Orrick, Herrington & Sutcliffe, Norman C. Hile, Michael C. Weed, Sacramento, for Honda Motors Co., Ltd.

Buchalter, Nemer, Fields & Younger, Richard Darwin, San Francisco, Fried, Frank, Harris Shriver & Jacobson, Eric H. Queen, Deborah A. Garza, Franklin M. Rubenstein, Los Angeles, for Canadian Automobile Dealers Association.

Herzfeld & Rubin, Craig L. Winterman, Jeffrey Chase, Los Angeles, for Volkswagen AG.

REARDON, Acting P.J.

In this coordinated proceeding, the trial court concluded that it lacked personal jurisdiction over four nonresident foreign defendants: Honda Motors Co., Ltd. of Japan (Honda), Volkswagen AG of Germany (Volkswagen), Nissan Motor Ltd. of Japan (Nissan) and the Canadian Automobile Dealers' Association (CADA) of Canada. As such, it granted motions to quash service of summons brought by each of these defendants. The plaintiffs¹ appeal, contending that the three parent manufacturers (1) are subject to the specific jurisdiction of California courts under the stream of commerce doctrine and (2) to this state's general jurisdiction under the representative services doctrine. They also argue that (3) the trial court had specific jurisdiction over the trade association pursuant to the effects test and (4) because CADA furthered a conspiracy while present in this state. The plaintiffs also contend that (5) for California courts to exercise jurisdiction over these four nonresident defendants would be consistent with fair play and substantial justice. Alternatively, they reason that (6) the trial court erred when it denied them a continuance to conduct further jurisdictional discovery against the three parent manufacturers. For their part, Honda and Volkswagen (7) ask us to take judicial notice of certain documents. We deny the requests for judicial notice and conclude that our long-arm statute does not reach the four nonresident defendants before us on appeal. Thus, we affirm the trial court's order granting their motions to quash service of summons.

I. FACTS

Some motor vehicles are sold by Canadian distributors at a cost substantially less than that charged by California distributors for nearly identical vehicles.² As a result of this price differential, Canadian exports of motor vehicles to California once rose dramatically. When Canadian motor vehicle distributors were threatened with penalties such as surcharges and loss of franchises if they continued to export their vehicles to California consumers, exports from Canada to the United States fell. As California is the largest market for motor vehicles in this country and one of the top six of such markets worldwide, the impact of declining motor vehicle exports from Canada into this state could be substantial.

In this appeal, the plaintiffs allege that various motor vehicle manufacturers, automobile distributors and motor vehicle trade associations illegally conspired to prevent the export of Canadian motor vehicles into California in order to maintain a higher price for the same vehicles sold in this state. Beginning in February 2003, many separate lawsuits were filed in California against various motor vehicle manufacturers, distributors and trade associations. Each lawsuit was filed as a class action brought on behalf of individuals who purchased new vehicles in California that were manufactured or distributed within a certain time period by one of the named defendants. The lawsuits alleged state law causes of action for antitrust conspiracy and unfair business practices. (See Bus. & Prof.Code, §§ 16720-16728, 17200-17210.) A similar lawsuit has been filed in federal court against many of the same defendants, alleging violations of federal antitrust laws. (See In re New Motor Vehicles Canadian Export (D.Me.2004) 307 F.Supp.2d 136, 137-138.)

Among the defendants named in the state lawsuits now before us on appeal were the Japanese and German corporations Honda, Volkswagen and Nissan, as well as their American and Canadian subsidiaries. Honda, Volkswagen and Nissan are the parent manufacturers of some of the motor vehicles, the sales of which are the subject of the alleged conspiracy in these matters. Nonprofit CADA was also named as a defendant. CADA is a trade organization that represents, promotes and protects the interests of franchised automobile dealers in Canada. It does not sell or lease vehicles in Canada or the United States. (See In re New Motor Vehicles Canadian Export, supra, 307 F.Supp.2d at p. 152.)

In July 2003, the state lawsuits were consolidated by order of this state's Judicial Case Coordination Panel. In October 2003, the named plaintiffs filed a consolidated amended class action complaint. At some point, it appears that CADA was served with a complaint and summons in Canada. In November 2003, CADA made a special appearance to file a motion to quash that summons for lack of personal jurisdiction. Plaintiffs opposed the motion to quash on various grounds, including the need for additional time for discovery in order to learn facts enabling them to establish personal jurisdiction. The trial court heard CADA's motion to quash in March and April 2004. It found no basis for finding general jurisdiction at that time, but permitted the plaintiffs to conduct further discovery in order to develop jurisdictional facts about several Canadian defendants, including CADA. In June 2004, the trial court appointed a discovery referee to oversee jurisdictional discovery to be completed by October 2004.

Meanwhile, in July 2004, the three parent manufacturers — Honda, Volkswagen and Nissan — were each served in Japan and Germany with an amended complaint and summons. In September and October 2004, all three parent manufacturers — each making a special appearance — moved to quash service of summons for lack of personal jurisdiction. The plaintiffs opposed the parent manufacturers' motions to quash on various grounds, again including a request for additional time for discovery of jurisdictional facts before the trial court ruled on the motions to quash.

On December 16, 2004, the trial court conducted further hearing on the motions to quash. It found that the only potential basis of jurisdiction over Honda, Nissan and Volkswagen would be special jurisdiction, not general jurisdiction. It issued tentative rulings denying the request for time to conduct further discovery of facts supporting the exercise of jurisdiction; finding that the plaintiffs failed to meet their burden of proving jurisdiction; and indicating an intention to grant the motions to quash filed by all four foreign defendants. Two weeks later, the trial court filed a formal order granting the motions to quash, consistent with its tentative decision.

II. JUDICIAL NOTICE^*

III. LAW OF JURISDICTION

A. Legal Framework

In order to understand the merits of the plaintiffs' various claims of jurisdiction over the four nonresident defendants named in this appeal, we review the settled law of jurisdiction. California courts may exercise jurisdiction on any basis that is not inconsistent with the state and federal Constitutions. (Code Civ. Proc., § 410.10 [long-arm statute]; Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1061, 29 Cal.Rptr.3d 33, 112 P.3d 28, cert. den. sub nom. Harrah's Las Vegas, Inc. v. Snowney (Nov. 14, 2005, No. 05-324) ___ U.S. ___, 126 S.Ct. 659, ___ L.Ed.2d ___ (Snowney); Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, 58 Cal.Rptr.2d 899, 926 P.2d 1085, cert. den. sub nom. Washington Restaurant Management, Inc. v. Vons Cos., Inc. (1997) 522 U.S. 808, 118 S.Ct. 47, 139 L.Ed.2d 13 (Vons); Bridgestone Corp. v. Superior Court (2002) 99 Cal.App.4th 767, 773, 121 Cal.Rptr.2d 673, cert. den. sub nom. Bridgestone Corp. v. T & T Truck & Crane Service, Inc. (2003) 537 U.S. 1233, 123 S.Ct. 1356, 155 L.Ed.2d 197 (Bridgestone); As You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal.App.4th 1859, 1866-1867, 58 Cal.Rptr.2d 654 (As You Sow).) By imposing only these constitutional limitations, our Legislature has authorized the broadest possible exercise of jurisdiction. (Sibley v. Superior Court (1976) 16 Cal.3d 442, 445, 128 Cal.Rptr. 34 546 P.2d 322, cert. den. sub nom. Carlsberg Mobile Home Properties, Ltd. '72 v. Sibley (1976) 429 U.S. 826, 97 S.Ct. 82, 50 L.Ed.2d 89; Abbott Power Corp. v. Overhead Electric Co. (1976) 60 Cal.App.3d 272, 276, 131 Cal.Rptr. 508.)

A state court's assertion of personal jurisdiction over a nonresident defendant not served with process in California comports with federal due process if the defendant had such minimum contacts with the state that the assertion of jurisdiction does not violate traditional notions of fair play and substantial justice. (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95; Snowney, supra, 35 Cal.4th at p. 1061, 29 Cal.Rptr.3d 33, 112 P.3d 28; Vons, supra, 14 Cal.4th at pp. 444-445, 58 Cal.Rptr.2d 899, 926 P.2d 1085; Bridgestone, supra, 99 Cal.App.4th at p. 773, 121 Cal.Rptr.2d 673; As You Sow, supra, 50 Cal.App.4th at p. 1867, 58 Cal.Rptr.2d 654.) A nonresident must have fair warning that a particular activity may subject it to jurisdiction in this state. (Vons, supra, 14 Cal.4th at pp. 446-447, 58 Cal.Rptr.2d 899, 926 P.2d 1085; see Shaffer v. Heitner (1977) 433 U.S. 186, 218, 97 S.Ct. 2569, 53 L.Ed.2d 683 (conc. opn. of Stevens, J.).) As a matter of fairness, federal constitutional principles prohibit a nonresident defendant from being brought...