Payrovi v. LG Chem Am., Inc.

• Decision Date: 29 September 2020
• Docket Number: Case No. 5:20-cv-04144-EJD
• Court: U.S. District Court — Northern District of California
• Parties: Reva PAYROVI, Plaintiff, v. LG CHEM AMERICA, INC., et al., Defendants.

491 F.Supp.3d 597

Reva PAYROVI, Plaintiff,

v.LG CHEM AMERICA, INC., et al., Defendants.

Case No. 5:20-cv-04144-EJD

United States District Court, N.D. California, San Jose Division.

Signed September 29, 2020

Ramez F. Shamieh, Wesley D. Scarborough, Shamieh Law, PLLC, Dallas, TX, Wayne Scott Kreger, Law Offices of Wayne Kreger, Santa Monica, CA, for Plaintiff.

Christopher Michael Sargoy, Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, CA, Wendy Sabina Dowse, Lewis Brisbois Bisgaard & Smith LLP, Indian Wells, CA, for Defendants.

ORDER DENYING DEFENDANT LG CHEM AMERICA, INC.'S MOTION TO DISMISS AND AUTHORIZING JURISDICTIONAL DISCOVERY, AND GRANTING LG CHEM, LTD.'S MOTIONS TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Re: Dkt. Nos. 14, 16

EDWARD J. DAVILA, United States District Judge

Pursuant to Federal Rule of Civil Procedure 12(b)(2), Defendants LG Chem America, Inc. ("LGC America") and LG Chem, Ltd. ("LGC Ltd.") each move to dismiss Plaintiff Reva Payrovi's complaint for lack of personal jurisdiction. LGC America Motion to Dismiss ("LGC America Mot."), Dkt. No. 14; LGC Ltd. Motion to Dismiss ("LGC Ltd. Mot."), Dkt. No. 16. Because these two motions raise substantially similar legal arguments, the Court considers the motions together. The Court took the matters under submission without oral argument pursuant to Civil Local Rule 7-1(b). Having considered the Parties’ papers, the Court GRANTS LGC Ltd.’s motion to dismiss.

The Court further authorizes jurisdictional discovery as to the extent and nature of LGC America's advertising and marketing of LG HG2 18650 3000mAh lithium-ion batteries to California retailers such as Vape Society. LGC America's motion to dismiss is thus DENIED without prejudice to resubmit after jurisdictional discovery has been completed.

I. BACKGROUND

A. Factual Background

Plaintiff Reva Payrovi is a resident of the State of Texas. Exhibits re Notice of Removal, Original Complaint and Jury Demand ("Compl.") ¶ 5, Dkt. No. 10. In March 2017, Plaintiff's daughter purchased a model LG HG2 18650 3000mAh lithium-ion battery (the "Battery"), intended to be used in electronic cigarettes, from Ipurchase Online d/b/a Vape Society Supply ("Vape Society") through its webstore. Id. ¶ 2. In February, 2018, while in Texas, Plaintiff placed the Battery in his pant leg pocket, where it exploded and caught fire, causing Plaintiff to suffer second-degree and third-degree burns

. Id. ¶ 3.

LGC America is a Delaware-incorporated entity with its principal place of business in Atlanta, Georgia. Declaration of Hyunsoo Kim ("Kim Decl.") ¶ 3, Dkt. No. 14-1.¹ Although Plaintiff alleges LGC America "has its principle place of business and nerve center" in San Jose, California, Compl. ¶ 6, LGC America avers that its corporate headquarters is in fact located in Atlanta, Georgia, and the President and Chief Financial Officer of LGC America both live and work in the State of Georgia. Id. ¶ 4.² LGC Ltd. is a South Korean company with its headquarters and principle place of business in Seoul, South Korea. Declaration of Sooha Yang ("Yang Decl.") ¶ 2, Dkt. No. 17. LGC Ltd., in particular, does not own or lease any property in California, and has no employees who work in California. Id. ¶¶ 5-6.

LGC America is a subsidiary of LGC Ltd. Compl. ¶ 12(N). Specifically, LGC America is wholly owned by LG Chem Michigan, Inc., which is wholly owned by LGC Ltd. Kim Decl. ¶ 5. While LGC Ltd. designs and manufactures products, including "manufactur[ing] 18650 lithium-ion cells for specific applications by sophisticated companies," Yang Decl. ¶ 9, LGC America does "not have any manufacturing plants, and it focuses on sales and distribution only," Kim. Decl. ¶ 10.

Plaintiff alleges that the Battery was designed, manufactured, sold, and placed into the stream of commerce by Defendants. Compl. ¶¶ 2, 19. Defendants in their declarations both provide that they have "never designed, manufactured, distributed, advertised, or sold any lithium-ion cell for use by individual consumers as standalone, removable, rechargeable batteries in electronic cigarette or vaping devices." Kim Decl. ¶ 11; Yang Decl. ¶ 11. They also both specifically deny "authoriz[ing] Vape Society to sell or distribute LG-brand lithium-ion cells for any purpose, [or] authoriz[ing] Vape Society to sell or distribute LG-brand lithium-ion cells for use by individual consumers as standalone, removable, rechargeable batteries in electronic cigarette or vaping devices." Kim Decl. ¶ 13; Yang Decl. ¶ 8.

B. Procedural Background

Plaintiff originally filed a lawsuit in the District Court of Dallas County, Texas against Defendants as well as against Vape Society, arising out of the same events that are at issue here. Declaration of Christopher M. Sargoy ("Sargoy Decl.") Exhibit B. The Dallas court dismissed Defendants from that lawsuit for lack of personal jurisdiction on February 18, 2020. Compl. ¶ 48. Plaintiff then filed this suit in Santa Clara County Superior Court. Id. ¶ 49. Defendant LGC Ltd. removed the case to this Court. Notice of Removal 1, Dkt. No. 1.

Defendants filed their motions to dismiss on June 30, 2020. LGC America Mot. 9; LGC Ltd. Mot. 9. Plaintiff opposes both motions. Plaintiff's Response to Defendant LG Chem, Ltd.’s Motion to Dismiss ("Opp. to LGC Ltd."), Dkt. No. 27; Plaintiff's Response to Defendant LG Chem America, Inc.’s Motion to Dismiss ("Opp. to LGC America"), Dkt. No. 28.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(2), defendants may move to dismiss for lack of personal jurisdiction. While the plaintiff bears the burden of showing that the Court has personal jurisdiction over the defendant, the court "resolves all disputed facts in favor of the plaintiff." See Pebble Beach Co. v. Caddy , 453 F.3d 1151, 1154 (9th Cir. 2006) (quotation marks and citation omitted). The Court may consider evidence presented in affidavits and declarations in determining personal jurisdiction. Data Disc, Inc. v. Sys. Tech. Assocs., Inc. , 557 F.2d 1280, 1285 (9th Cir. 1977) ; but see Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir. 1995) ("When a district court acts on a defendant's motion to dismiss under Rule 12(b)(2) without holding an evidentiary hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss. That is, the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." (citations omitted)). "The plaintiff cannot simply rest on the bare allegations of its complaint, but uncontroverted allegations in the complaint must be taken as true." Mavrix Photo, Inc. v. Brand Techs., Inc. , 647 F.3d 1218, 1223 (9th Cir. 2011) (quotation marks and citation omitted). "The Court may not assume the truth of allegations that are contradicted by affidavit." In re Cathode Ray Tube (CRT) Antitrust Litig. , 27 F. Supp. 3d 1002, 1008 (N.D. Cal. 2014) (citing Data Disc, Inc. , 557 F.2d at 1284 ).

There are two limitations that restrict a court's power to exercise personal jurisdiction over a nonresident defendant: the constitutional principles of due process and the applicable state personal jurisdiction rule. Sher v. Johnson , 911 F.2d 1357, 1360 (9th Cir. 1990). The Ninth Circuit has held that because California's personal jurisdictional rule is "coextensive with the outer limits of due process," personal jurisdictional inquiries under California law are constrained solely by constitutional principles. Id. at 1361 ; Cal. Civ. Proc. Code § 410.10.

The Supreme Court has held that constitutional due process requires that a nonresident defendant have sufficient "minimum contacts" with the forum state "such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In applying the minimum contacts analysis, a court may exercise either general or specific jurisdiction over a nonresident defendant. Doe v. Unocal Corp. , 248 F.3d 915, 923 (9th Cir. 2001), abrogated on other grounds by Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). When the defendant's activities in the forum state are substantial, continuous and systematic, a court may exercise general jurisdiction over the defendant, even if the cause of action is unrelated to defendant's contacts with the forum. Id. at 923. A defendant may also be subject to specific jurisdiction if the defendant "has sufficient contacts with the forum state in relation to the cause of action." Sher , 911 F.2d at 1361 (citations omitted).

III. DISCUSSION

A. Imputation of Contacts

In asserting that personal jurisdiction can be exercised over Defendants, Plaintiff alleges a wide variety of contacts between Defendants and the State of California. See Compl. ¶¶ 10, 12. However, the complaint rarely distinguishes which allegations pertain to which defendant(s), with distinctions made only in two places relating to jurisdiction. See id. ¶¶ 6, 7. "It is well established that, as a general rule, where a parent and a subsidiary are separate and distinct corporate entities, the presence of one ... in a forum state may not be attributed to the other." Axiom Foods, Inc. v. Acerchem Int'l, Inc. , 874 F.3d 1064, 1071 (9th Cir. 2017) (quoting Holland Am. Line Inc. v. Wartsila N. Am., Inc. , 485 F.3d 450, 459 (9th Cir. 2007) ). This Court cannot impute the parent company's contacts to the subsidiary, or vice versa, absent allegations of agency, alter ego, or a similar relationship. See id. at 1071 n.5 (explaining that where a plaintiff has not met "the standard for finding an agency relationship" nor "spelled out an alter ego theory of liability allowing [the court] to attribute the activities of the parent entity to the subsidiary," the contacts of one corporation would not be attributed to the other).

In this case, Plaintiff alleges that "the actions of the subsidiaries in establishing principal places of business in...