Meyers v. Asics Corp., CV89-0331-HLH (Kx).

• Decision Date: 24 April 1989
• Docket Number: No. CV89-0331-HLH (Kx).,CV89-0331-HLH (Kx).
• Citation: 711 F. Supp. 1001
• Parties: Stuart MEYERS, Plaintiff, v. ASICS CORP., Defendant.
• Court: U.S. District Court — Central District of California

711 F. Supp. 1001

Stuart MEYERS, Plaintiff, v. ASICS CORP., Defendant.

No. CV89-0331-HLH (Kx).

United States District Court, C.D. California.

April 24, 1989.

Mark Garscia, Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst, Los Angeles, Cal., for plaintiff.

Steven M. Perry, Munger, Tolles & Olson, Los Angeles, Cal., David G. Conlin, Dike, Bronstein, Roberts & Cushman, Boston, Mass., for defendant.

ORDER DENYING MOTION TO DISMISS OR QUASH SERVICE; ORDER RE MDL REVIEW (MDL 777)

HUPP, District Judge.

BACKGROUND

This patent infringement action was filed by Stuart Meyers against ASICS Corp. (ASICS), a Japanese manufacturer of sports shoes, on December 9, 1989. It came to this court as a low number transfer due to its relation to the case of Meyers v. ASICS Tiger Corp. (Tiger) CV 88-3071. In that case, the plaintiff sued the American subsidiary of ASICS, alleging that the ASICS shoes which Tiger distributes in this country infringe the Meyers patent for a special sole and insole. Tiger is an independent American corporation wholly owned by ASICS. The case against Tiger was originally filed in this court but was transferred pursuant to the MDL procedure to the Southern District of New York for consolidated pretrial proceedings.

Meyers has already attempted to sue the parent, ASICS, in the Southern District of New York as part of the MDL litigation; however, Judge Richard Owen, who is handling the Meyers patent MDL matter, dismissed the case on the grounds that there was no personal jurisdiction under New York's long arm statute. Meyers refiled the action in the Central District, alleging that ASICS has the required minimum contacts with California. ASICS has again moved for dismissal of the case on the grounds that the Court lacks personal jurisdiction. ASICS also claims that service was performed by registered mail on the defendant in Japan in contravention of the Hague Convention.

FACTS

According to the ASICS annual report, the parent set up Tiger "in the suburbs of Los Angeles as (its) major U.S. sales distribution center." The parent described the creation of the subsidiary as a move which "was certain to strengthen the Company's operations in the United States considerably." The shoes are sold by ASICS to Tiger on an FOB Japan, Korea, or Taiwan basis, with title being transferred to the American subsidiary prior to the time they are transported to the United States. The parent does not sell shoes directly to consumers in this state. However, after the goods are sold to Tiger, they are shipped to California, and later distributed to the rest of the United States.¹

There is a substantial overlap between the board of directors and executive offices of the two companies (all of the directors of Tiger are ASICS officials, as are the president and other executive officers). However it has already been determined by Judge Owen that Tiger is independent from ASICS, and is not an alter ego of the parent.

ASICS estimates that California residents ultimately purchase about 4% of the sports shoes ASICS sells. ASICS total world shoe sales amounted to about $380 million (including sales of all subsidiaries). Hence, approximately $15 million worth of ASICS shoes were sold in the state.

ASICS has a "liaison" office in California which gathers information on market trends in the United States and on competitive developments in the industry. It also performs communications services to assist ASICS in its dealings with Tiger. Finally, ASICS provides funds for and participates in trade shows in the United States with Tiger, and it engages in some other limited marketing assistance.

ANALYSIS

The motion by ASICS makes two separate claims: 1) that this Court lacks personal jurisdiction over ASICS and 2) that service should be quashed.

I. Personal jurisdiction

The Ninth Circuit very recently held that "where a trial court's ruling (on personal jurisdiction) is based solely upon a review of affidavits and discovery materials, dismissal is appropriate only if the plaintiff fails to make a prima facie showing ..." See Shute v. Carnival Cruise Lines, 863 F.2d 1437 (9th Cir.1988). Thus, the fact that Meyers may have had some discovery already related to the New York action does not affect the standard of proof.

The federal courts, of course, apply the long arm statutes of the states in which they sit, with California assuming the maximum jurisdiction allowed by the Fourteenth Amendment through Cal.Code of Civ.Pro. § 410.10. Eg. Butcher's Union Local No. 498 v. SDC Investments, Inc., 788 F.2d 535 (9th Cir.1986) Personal jurisdiction over ASICS may be established in one of two forms—general or specific. Where contacts with are substantial, systematic, or continuous, a party may be subject to suit in a forum on any topic, even if the suit is unrelated to the activities which it conducts in the forum. Even without general jurisdiction, a court may have specific jurisdiction over a party where its activities in the forum relate to the injury sued upon.

In this case, the plaintiff asserts that although Tiger is a separate legal entity and ASICS does not directly market shoes to California consumers, the parent is nevertheless subject to suit here as a result of its manufacture and distribution through Tiger of infringing product. Meyers claims that both general and specific jurisdiction exist as to ASICS in this forum; however, his primary claim focuses on the specific test.

The Ninth Circuit has listed the following considerations as relevant in determining if minimum specific jurisdiction has been shown: 1) the nonresident must do some act or consummate some transaction with the forum by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; 2) the claims must arise out of or result from its forum related activities; and 3) the exercise of jurisdiction must be reasonable. Eg. Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir.1986).

1. Effect of decision in Southern District of New York

The New York District Judge dismissed virtually the same action in that forum, holding that there had not been a sufficient showing that ASICS was covered by New York's long arm statute. ASICS is correct that res judicata is applied to a prior decision which finds that personal jurisdiction does not exist. See Kendall v. Overseas Development Corp., 700 F.2d 536 (9th Cir.1983).

The New York District Court found that ASICS was not authorized to do business in New York, nor was it present in the state. It found that the only direct contact with New York was the parent's activity related to trade shows in the state, and it concluded that these activities were not enough to satisfy New York's statutes (citing Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757 (2nd Cir.1983)).

Additionally, the court found that Tiger was not a mere department of the parent and all of the corporate formalities had been observed, with Tiger maintaining independent decision making authority; thus, jurisdiction could not be premised on an alter ego theory. Furthermore, the New York District Court found that Tiger's activities in New York "were not so extensive or significant enough to ASICS" to find that ASICS was present in the state through agency principles under New York law. Finally, the court found that the New York statute which allows jurisdiction over torts committed outside the state causing harm in the state where the defendant's total commercial activity is so substantial that injury in New York is foreseeable, did not apply. That was the case because the "plaintiff's residence does not determine the place of injury in tort cases."

The Court accepts the findings as establishing facts under the doctrine of collateral estoppel; in addition, if the facts as to the California connections were the same as in New York, the identical result would follow in the Ninth Circuit under Cascade Corp. v. Hiab-Foco AB, 619 F.2d 36 (9th Cir.1980) (discussed infra).

There are, however, additional facts which lead to a different result in California. The New York District Court's holding does not control the decision in the case at hand for two reasons: 1) the New York District Judge relied on state statutes to dismiss the action, not the Constitution; and 2) the decision in the earlier proceeding, of course, focused on New York contacts and not on those alleged to exist in California. In sum, the only part of the New York holding which appears to be applicable to the present motion is the finding that Tiger is an independent company which controls its own decision making structure and observes all corporate formalities, and thus, there is no alter ego liability.

2. Purposeful availment

A. Stream of Commerce/Marketing Conduit

Although it is clear that a nonresident parent is not subject to process solely based on the actions of an independent subsidiary, a parent may still be responsible for its own actions directed at a forum. This Circuit has long recognized that a company which injects its products into a forum is subject to jurisdiction. Eg. Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231, 235 (9th Cir.1969); Taubler v. Giraud, 655 F.2d 991 (9th Cir.1981); Plant Food Co-op v. Wolfkill Feed & Fertilizer Corp., 633 F.2d 155 (9th Cir.1980).

In United States v. Toyota Motor Corp., 561 F.Supp. 354 (C.D.Cal.1983) (Hall, J.), a court in this district considered a fact situation almost identical to the one in the instant case. Toyota had a local subsidiary to which it shipped cars on an FOB Japan basis. All advertising and marketing was handled by the United States subsidiary, which was the exclusive agent for the Japanese car company. Toyota, supra, at 356. The two companies were not alter egos, though there was significant overlap between the personnel of the parent and subsidiary. Id. Finally, it was determined that...