Velandra v. Regie Nationale Des Usines Renault

• Decision Date: 10 September 1964
• Docket Number: No. 15362.,15362.
• Citation: 336 F.2d 292
• Parties: Ruby VELANDRA and Roy Velandra, Plaintiffs-Appellants, v. REGIE NATIONALE DES USINES RENAULT and Renault, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

336 F.2d 292 (1964)

Ruby VELANDRA and Roy Velandra, Plaintiffs-Appellants, v. REGIE NATIONALE DES USINES RENAULT and Renault, Inc., Defendants-Appellees.

No. 15362.

United States Court of Appeals Sixth Circuit.

September 10, 1964.

David R. Goldberg, Toledo, Ohio, Kitchen & Kitchen, Toledo, Ohio, on the brief, Cubbon & Rice, Toledo, Ohio, of counsel, for appellants.

Frank E. Kane, Toledo, Ohio, Ward, Plunkett & Cooney, Detroit, Mich., on the brief, Eastman, Stichter, Smith & Bergman, John R. Eastman, Toledo, Ohio, of counsel, for appellees.

Before McALLISTER and O'SULLIVAN, Circuit Judges, and WILSON, District Judge.

FRANK W. WILSON, District Judge.

In these products liability lawsuits it is alleged that the plaintiff, Ruby Velandra, sustained severe and permanently disabling personal injuries, and that the plaintiff, Roy Velandra, sustained medical expenses, loss of services, and loss of consortium, all as the result of an automobile accident in Michigan caused by defective brakes in a Renault automobile manufactured in France by the defendant, Regie Nationale des Usines Renault (Regie), and imported into the United States by the defendant, Renault, Inc. (Renault), before ultimate sale to the plaintiffs in Ohio.

The plaintiffs commenced their suits in the United States District Court for the Eastern District of Michigan, for negligent manufacture and for breach of express and implied warranties. The complaints claim federal jurisdiction upon the basis of diversity of citizenship and amount in controversy, alleging that the plaintiffs are citizens of Michigan, that defendant Renault is a New York corporation, and that defendant Regie is a French corporation.¹

Neither defendant having a place of business or agent for the service of process in Michigan, service was obtained upon the Secretary of State for Michigan, "pursuant to the appropriate statutory provision for substituted service."² Both defendants moved to dismiss for lack of personal jurisdiction, and the District Court, after the submission of affidavits and counter-affidavits, found that it did lack jurisdiction over the defendants, sustained the motions, and dismissed the complaints, all without filing a written opinion. These appeals followed.

Some argument has been devoted to the question whether, under the principle of Erie R. Co. v. Tompkins,³ state law rather than federal law governs the personal jurisdiction of a federal court over foreign corporations in diversity cases. This vexing question⁴ remains a source of controversy in other jurisdictions,⁵ but was recently resolved in favor of state law by this Court.⁶ In determining the personal jurisdiction of a federal court located in Michigan over these foreign corporations, this Court must therefore look to the law of Michigan.⁷

The law of Michigan in this regard may be found in the case of Jennings v. WSM, Inc.,⁸ where the Supreme Court of Michigan confirmed its adherence to the rule of the landmark case of International Shoe Company v. Washington.⁹ In that case the United States Supreme Court held that under the Due Process clause of the Fourteenth Amendment of the United States Constitution a state court may exercise personal jurisdiction over a foreign corporation having such "minimum contacts" with the State of the forum that the exercise of jurisdiction does not offend "`traditional notions of fair play and substantial justice.'"¹⁰

The Court must therefore first look to see what "contacts" the defendants each have with the State of Michigan under the facts of this case. It is apparent that any definition of "minimum contacts," if not also any definition of "traditional notions of fair play," will require an evolutionary process rather than a quick definitive statement, as these terms involve subjective judgments that must be based upon a multitude of variant factors as they are presented in a multitude of cases. The existence or nonexistence of the necessary "minimum contacts" to justify the upholding of personal jurisdiction over foreign corporations under the Fourteenth Amendment as interpreted in the International Shoe Company case must obviously be worked out with reference to the facts of a particular case rather than in a statement of dogmatic rules of all-inclusive principles.

Affidavits filed by the parties in support of and in opposition to the motions to dismiss below establish the general nature and extent of the defendants' activities within and their relationship to the State of Michigan. The following appear to be the facts upon which this opinion must be based.

Regie is a French corporate manufacturer of Renault automobiles.¹¹ Regie exports its automobiles into the United States through Renault, a New York corporation which is a wholly owned subsidiary of Regie and the exclusive American importer of Renault automobiles. Renault in turn distributes these automobiles to dealers throughout the United States by means of regional distributors, one of which at the time of the commencement of these suits was Renault Great Lakes, Inc. (Great Lakes), an Illinois corporation which is wholly owned by Renault, and which is the Renault distributor for the midwestern region of the United States, including the State of Michigan. Great Lakes carries on substantial economic activities in Michigan, among other things locating and granting franchises to Michigan dealers, and delivering to those dealers the automobiles it has purchased from Renault. The only evidence put into the record with regard to the volume of sales of Renault automobiles in Michigan is that there are three dealers in Detroit, one of whom sells a "substantial" number of Renaults, resulting in gross sales "upward" of $100,000.00. There is also evidence that at the time of a dealer retail sale to an individual in Michigan, an express written warranty in Regie's name is delivered to the purchaser.¹²

Do the above facts establish such "minimum contacts" with the State of Michigan as to satisfy "traditional notions of fair play" so as to properly subject the defendant foreign corporation to the personal jurisdiction of the courts of Michigan?

Considering first the chain of corporate ownership, Regie owns 100% of the stock of Renault, and Renault in turn owns 100% of the stock of Great Lakes, which, as indicated, carries on substantial economic activities within the State of Michigan. However, the mere ownership by a corporation of all of the stock of a subsidiary amenable to the jurisdiction of the courts of a state may not alone be sufficient to justify holding the parent corporation likewise amenable.¹³ In the early case of Cannon Mfg. Co. v. Cudahy Packing Co.,¹⁴ the Supreme Court held that the activities of a subsidiary did not subject its parent corporation to the personal jurisdiction of local courts.

It should be noted that the ruling of the Cannon case, if not qualified by the subsequent ruling in the International Shoe Company case, has been at least qualified in later cases holding foreign corporations amenable to the personal jurisdiction of local courts because of the local activities of subsidiary corporations upon the theory that the corporate separation is fictitious,¹⁵ or that the parent has held the subsidiary out as its agent,¹⁶ or, more vaguely, that the parent has exercised an undue degree of control over the subsidiary.¹⁷

Unfortunately, such reasoning in these and similar cases,¹⁸ fails to explain the decisions of the courts adequately.¹⁹ Thus the law relating to the fictions of agency and of separate corporate entity was developed for purposes other than determining amenability to personal jurisdiction, and the law of such amenability is merely confused by reference to these inapposite matters.

The International Shoe decision represented an effort by the Supreme Court to clarify earlier concepts in the area of the amenability of foreign corporations to the personal jurisdiction of state courts by sweeping aside any lingering notions that the earlier shibboleths of "consent," "presence," and "doing business" were self-defining abstractions, and by redefining those tests in terms of "minimum contacts."²⁰ Following this decision it would seem appropriate, for the purpose of determining the amenability to jurisdiction of a foreign corporation which happens to own a subsidiary corporation carrying on local activities, to inquire whether the parent has the requisite minimum contacts with the State of the forum. Thus the ownership of the subsidiary carrying on local activities in Michigan represents merely one contact or factor to be considered in assessing the existence or non-existence of the requisite minimum contacts with the State of Michigan,²¹ but is not sufficient of itself to hold the present foreign corporations amenable to personal jurisdiction.

Another contact alleged to exist between the defendant and the State of Michigan is the sale of the defendant's product, Renault automobiles, within the State of Michigan and the delivery within the State of a warranty thereon, to which warranty the defendant Regie is a party. It is proper to note that it has come to be increasingly recognized that activities — in particular sales of products — outside a state resulting in consequences within the state may subject the actors to the personal jurisdiction of the courts within the state.²² In this regard the plaintiff relies strongly upon the case of Regie Nationale des Usines Renault v. The Superior Court of the State of California, 208 Cal.App.2d 702, 25 Cal.Rptr. 530, wherein the Court held these same defendants to be subject to the personal jurisdiction of a court in California under somewhat analogous circumstances. While the legal principles there enunciated as distinguished from the factual situation there before the Court, may be relevant to a resolution of the legal issues of "minimum contact" and "fair play" in this case, under the facts as they appear in the record of this case w...